If you’re like most small business owners—or the rest of the world, for that matter—you probably weren’t prepared for the economic disasters that have been caused by the COVID-19 pandemic. According to the U.S. Chamber of Commerce, in July 2020, 70% of small business owners were concerned about the financial hardships due to prolonged business closure. Chances are good that even the most well-prepared business owners will come out of this with a limp. Everyone will be affected but the question is, to what degree? Even the most unprepared business owners can stay positive during COVID in order to stay focused.
A friend and colleague of mine said something to me several weeks ago. Since I first heard him utter these words, they have resonated with me and I have come to adopt this claim as my own. What he said was, “I will bet on the entrepreneur every single time.” But why would he make such a statement? Why did this ring so true in my own mind?
I believe the reason is that entrepreneurs have an uncanny ability to roll with the punches. They have a vision and an ambition that just can’t be rivaled. As a result, they are able to pick themselves up no matter how many times they are knocked down. Entrepreneurs will try and try again until they’ve finally succeeded. So why were so many small business owners blind-sided by the closure of the U.S. economy brought on by the COVID-19 pandemic?
Well, such closure was unprecedented, for one. On the other hand, many have worked so hard to build their businesses from nothing, to finally become cashflow positive and to turn a profit, that when they finally get there, they simply wanted to enjoy it. This isn’t the case for all small business owners, but undoubtedly, some of them grew complacent and failed to prepare for EVERY possibility. If this is you, you’re probably asking, “where do I go from here?’
Back in 2008-2009, I went through a very difficult time in my life. I had already become one of the most successful young financial planners in the country but I went through a major lawsuit that raked me over the coals. Everything ended up being settled on both sides and things were as they should be. However, things were tough during that time. I had a house payment, a car payment, a baby on the way, no clients, and no income. It would have been very easy to just throw in the towel back then.
However, I was reminded of a verse in chapter 23 of Proverbs that says, “As a man thinks in his heart, so is he.” Friends, this is so true and I believe that it is at the heart of the entrepreneurial spirit. It is the belief that we can achieve anything that has driven small business owners all over the country to improve their communities through service. Because I didn’t allow my circumstances back then to dictate my future, I am now able to help other small business owners to realize their financial dreams.
To really drive this point about the entrepreneurial spirit home, many of the conversations that we’ve had with our clients have not been alarmist in nature but pragmatic. Although some of them weren’t as prepared for this event as, maybe, they should have been, they realize that no matter what happens, they still have their life, their families, and their faith. They realize that even in the worst-case scenario, they will still be able to start over again, doing it better and faster than before.
Many of us were caught off guard by this. Although some were more prepared than others, we are all feeling the sting. So how can we respond to this crisis and give ourselves the best chance at mitigating the damage? For starters, we need to remember that the lenders and banks who have helped us with the financial needs of our businesses are our allies. Oftentimes, we want to pull down the shades and disconnect the phone when things aren’t going well and we can’t quite make our monthly payments.
However, hiding out and hoping that the problem will just go away has never worked. Contact your lenders immediately! Let them know your situation and they will work to set up a plan to keep you in good standing until you’re able to recover. None of them are interested in foreclosing on your business and equipment. They want to help you through this. In the situation that I detailed earlier, I was able to defer my mortgage payments for a few months or even pay interest-only payments.
With this in mind, be prepared when you contact your landlords, lenders, and bankers. Have your financial information already in hand and documented in an easily legible way so that when you approach them for help, they can quickly identify the problems and help to create a workable solution. Likewise, speak with your advisors. Your attornies, financial advisors, and tax professionals can be an enormous help in this situation. If you don’t have a financial advisor, get one! The value that they provide is far greater than the cost of their fees.
In addition, we can’t reasonably expect our clientele to pay us when we can’t provide them with a service. During this time, a good way to mitigate some of the damage to your cash flow is to be creative with your services. A great example of this is a daycare that could no longer receive children. Because of this, they created a curriculum for parents to use with their children while they are stuck at home. Likewise, they created virtual playrooms for the children to stay connected with their friends.
One of the things that we, as financial planners, always push for is less government handling of our small business owner’s businesses. If this is true during times of prosperity we don’t want to rely too heavily on the government during times of struggle either. However, I want to apprise you of all the avenues that are available to small business owners.
Recently, the President signed into effect, the Families First Coronavirus Response Act. Essentially, this offers a paid leave benefit to eligible workers in which they must take 14 or more days of leave from their work due to the qualifying COVID-19-related reasons. Eligible workers will receive a benefit for a month (up to three months) that is equal to two-thirds of their average monthly salary with a $4,000 cap. It is important to note that the benefit will be based on the most recent year of wages OR self-employment income. Typically, the self-employed have been ineligible for unemployment style benefits.
The program, which will be administered by the Social Security Administration, has specified five key points:
As business owners, we must be prepared for any possible eventuality. Maybe the effects of this pandemic caught us by surprise but the entrepreneurial spirit that has led us to get up, dust ourselves off, and try again is the same one that will see us through this crisis, helping us to stay positive during COVID. With determination, communication with our lenders, a little creative thinking, and some well thought out planning, we will come back better than before.
If you don’t already have a qualified financial planner or if you’re dissatisfied with their guidance, the Financially Simple business advisory team is here to help.
Have questions? Financially Simple is here to help guide you through all of your business concerns. Contact us, today!