Surviving COVID 19: Business Owners Thread

[El Presidente]

It doesn't matter if you are self employed or employ 1000. This thread is simply here to pool FOH resources to stimulate thinking outside of the square to ensure as many FOH members as possible survive and keep employing people.

Viewpoints, tips, articles that you think add value......post them up. 

Many are going through the 5 stages of grief: denial, anger, bargaining, depression and acceptance.  I suggest getting to the 5th stage now and putting strategies in place for tomorrow. 

 

 

 

 

 

 

 

 

 

[El Presidente]

Some very good advice here. 

 

 

COVID-19: Nine tips for business survival

IAN WHITWORTH

MARCH 18, 2020

 

SCENE CHANGE CO-FOUNDER AND MOTIVATION FOR SCEPTICS BLOGGER IAN WHITWORTH. SOURCE: SUPPLIED.

Yep it’s back to COVID-19 this week. We’re right amongst some serious end-times shit for our industry, and it’s probably the same for you. Thanks a lot to whoever ate that original pangolin — now the tab for their exotic dinner is in the billions per week.

When I wrote about losing six figures, I didn’t think three weeks later I’d be referring to that week as ‘the good old days’. A COVID-19 day is a week in the old scale.

Three weeks ago was the Savage Setback era; this week we’re into the Survival Not Guaranteed times. I literally answer my phone now with: “What fresh bad news have you got for me?”

Plenty of SMEs will not see the end of this financial year. There are no easy answers, and for some businesses, no answers at all.

From someone who’s gritted through some bad times before, here are a few things you can do to make it less horrendous.

They’ll increase the odds that you’ll be one of the businesses still standing when the vaccine reinforcements arrive in 12 months or however long it takes. This story is a bit longer than usual but this is not the usual infotainment — this is serious.

 

 

1. Do your cashflow forecasts *now*

Honestly I can’t believe I have to write this. It’s like asking airline pilots if they checked the fuel. Yet I’ve spoken to half a dozen business owners lately who have done no more than a revenue forecast, then checked their bank balance, plus A/R less A/P.

That is not good enough with entire packs of wolves at the door. You need details: wages, rent, tax, supplier payments, documented down to the day they’re due. That’s the moment you go from ‘might be okay’ to ‘oh my God I must act now’.

If people in your industry are saying, “if you can survive X months COVID-19 will all be over and demand will take off again”, assume it will be at least 50% longer than that.

And when they say “but we’ll emerge from this stronger than ever”, remember those are just words they say to make you feel better and it’s not necessarily true.

For us, the cashflow hellscape has entered a new realm. Normally you can look ahead and go: mmm, terrible revenue months coming up, better take precautions. Now that booked revenue sits there, offering a glimmer of hope, then evaporates a week out. Fucking all of it.

So on that topic:

2. Update your terms and conditions

My new full-time hobby is the cancellation clauses in our terms and conditions. I recognise that doesn’t sound cool, but it’s all that stands between us and extinction.

Not that we’re all about black-and-white enforcement of contract; even our hardest negotiations are done by talking like reasonable people. But in times like these you need a place to start that conversation.

 

We hadn’t checked our terms and conditions for a few years, and we’d grown a lot. They left us wide open to danger. A cancellation on a $5,000 job isn’t terminal. A few $200,000 ones are.

Plus, they were written on the olden-days assumption of a few random cancellations every so often, rather than every single client rushing for the exits.

Sorry, but we’re too small to underwrite the commercial risk management decisions of large companies. So we updated our cancellation clauses with more realistic lead times and fees that accurately reflect the hard losses we will incur.

We did that a month back and it’s been an essential part of our survival plan. Check you’re not exposed.

While we’re on T&Cs, every so often we quote clients who are regular middle managers, but they quite fancy their contract law skills. They go through your terms (and ours is only two pages long) and send you a long series of proposed amendments, drawn from the ancient legal principles of Things They Reckon.

Here’s our response, and it should be yours:

No.

Anyone who does it is a maniac who will only get worse once you start working together. Imagine the nutbag diligence they’ll apply to querying your invoices. If you need to say no to the work, do it.

Almost all terms and conditions are drafted on the assumption of both sides being reasonably fair. Amateur lawyer mate’s assumption that you’re trying to conceal secret confidence tricks reveals a level of paranoia you don’t want to be working with, even in the starvation times.

I’m not a lawyer, but…

3. Have the COVID-19 chat with suppliers

You will owe money to two sorts of organisations: the business suppliers you work with every week, and large ogres like landlords, banks and the tax office. The first cares about your ongoing survival, the second … not so much.

Talk to your regular suppliers and be honest. I’ve written a lot before about not screwing suppliers out of their last cent, because one day you’ll need them. Did you do that? Because now is that time. Ask them to help you survive, in whatever way they can, so you can be a good, ongoing customer in future.

We started our business about ten minutes before the last global financial crisis. There was a core of suppliers who really helped us out back then and that gratitude lingers to the present day.

You can have a shot at landlords and banks, sometimes it works. Just this morning we got a deal out of one landlord to push part of our rent back into the second half of the year. Commercial landlords are, as a general rule, total dicks. But try it.

Commercial landlords: much less endearing and far worse dressed than this.

4. Talk to the tax office

When the grim reaper comes for a doomed business, it’s almost always the tax office under those black robes.

That’s because a lot of businesses are either hopeless at understanding their tax obligations, or treat it as something that can be permanently kicked down the road while they pay suppliers who are screaming louder.

Trading your way out of tax obligations is a bitch, because more trading means more of at least two sorts of tax, probably four.

Sooner or later they will come for you, and frankly a lot of businesses deserve it.

Here’s what you do: call the tax office and tell them honestly about the state of your business. Ask for a payment plan. We’ve done this a few times over the years for some of our smaller businesses (obviously not the ones under Armenian management) – and the tax office has never been anything other than reasonable. I think they’re so used to scams and denials that they find honesty quite refreshing.

Now is a good time to be asking them for more time — they’ll be expecting your call.

(Update: they’ve now made it official. There’s info here on what they can do for you).

Be grateful for this reprieve and take paying it off very seriously. Or it’s Reaper Time for real.

5. Don’t wait for the government to rescue you

A lot of business people like to complain that the government doesn’t do enough to help them. This is a dangerous, cargo-cult mentality because you’re waiting for them to do something.

The whole point of owning a business is having control over your own destiny. Deal with your own affairs as if there was no government help coming. If it does come, it will be less and later than you’d hoped. Treat it as an unexpected bonus but there is no governmental superhero coming to save you in the final scene of your COVID-19 movie. It’s up to you.

6. Come up with new ideas for your pricing and terms

Think about how you can get paid up front. You want the work so bad but now is the time to tighten up your payment terms, not loosen them. Do a sweet deal for payment upfront. Get payment in stages rather than at the end of a project.

Companies with purchasing budgets will still have to spend that cash by the end of financial year, coronavirus or not.

The further up the management ladder you can contact on the client side, the better chance you’ll have of getting some business out of them. (Read how to do that here).

7. Is there something else you can do for a bit?

Today I heard of an exhibition stand constructor that is being smashed by cancellations, so they’re turning their cabinetmakers, carpenters and equipment to do kitchens and wardrobes for a sweet deal. People are happy to put the word out to help in desperate times.

What else could you do to get bit of cash in and keep your team together?

8. Service those surviving customers like nothing else

There are still people with money. And you have a ton of excess capacity, both in staff and whatever else it is you do.

Now is the time to throw in the free dessert, the room upgrade, the matching belt, something to thank them for being a lovely person and spending cash with you instead of wasting it on another half-pallet of toilet paper.

Now is the time you can make them a customer for life.

9. Laying off staff

And now we get to the elephant in the room. How long can you hold onto your staff? It’s an ugly question, but being in charge means facing up to ugly things.

If you just use this as an excuse to punt people to boost your executive bonus — which happens — you are scum and people know it.

If you have no revenue and no prospect of any revenue, you have to be realistic. No matter how much you say your people are your greatest asset, no matter how much you love them as people, their long-term needs are not served by your business going under. Then they’re all unemployed, and you’re not going to be starting a new business any time soon.

You can start by seeing if they’re okay about agreeing to a reduced number of days per week so everyone keeps their job. This is easier in smaller places. Some specific advice from Fair Work Australia on that here.

The other option is that you probably have people on your team who are a bit underperform-y. You might be keeping them because you can’t find anyone better, or just because you are nice. If you make them redundant, it’s tough but it will lift everyone else, because your good people can spot an underperformer quicker than you can.

I know it goes against the generally humane vibe of this blog, but when it’s time, you have to act quickly. It’s fucking awful but people will survive and you don’t destroy all you’ve built over years of personal sacrifice.

That’s all I’ve got for now. Got to go and do more cashflow calls. Be careful out there. And lay off the pangolins for God’s sake.

[HarveyBoulevard]

I am a criminal defense attorney and in Lieu of having clients come in and see me face-to-face, I have started doing FaceTime and Skype new client meetings. Has been working well. The only downside is they have closed the courts for three weeks so the sense of urgency is not quite what it was a couple of days ago.

I went through the budget yesterday and slashed everything that is not essential. Go through your expenses and cut the fat. You can always expand in the future but only if you survive the present.

I canceled the after hours and weekend answering service. I will just forward the phones to myself and my partner and we will just spend the additional time taking new client calls ourselves. Money well saved and time well spent.

[CigSid]

Sent the programmers and developers home to work. Skeleton crews in the offices, to update news and keep a watch on cybersecurity. Shelter in place for the rest of the employees. We are towards the end of our 10K (audit for 2019) with a deadline of March 31, auditors are slower than usual... it’s going to be close, but hopefully we can get it done on time...

[Fuzz]

Already sent out notifications to customers of shortages in stock over the coming months as supply chains are strained. Told everyone it is first come, first served. No holding of stock for future orders. Either place the order now (and pay immediately for those not on account), and they will be delivered when requested, or take the risk stock may not be available. Account holder orders free period start on the day of order.

Orders have been coming in, and so have advance payments. Will be monitoring very closely all accounts to make sure payments are made on time.

Let go of my warehouse worker today, as I decided he was too expensive to keep around. Decided to higher an older, more desperate worker... so I hired myself back on a severely reduced salary.

 

[El Presidente]

17 minutes ago, Fuzz said:

Let go of my warehouse worker today, as I decided he was too expensive to keep around.

What is your dad going to do? 

[Fuzz]

Just now, El Presidente said:

What is your dad going to do? 

Oh, I retired him a long time ago. He just comes in a few days a week to play his crossword puzzles and annoy me.

[El Presidente]

1 minute ago, Fuzz said:

Oh, I retired him a long time ago. He just comes in a few days a week to play his crossword puzzles and annoy me.

........I have a few here who do the same  

[busdriver]

The first of my businesses to shut down is a restaurant.  

We gave the employees a bonus, a bunch of food, and most importantly honesty.  Very few of them will have any hours in the coming weeks so we advised them to apply for unemployment immediately.  Other restaurant owners are either more optimistic, don’t have a plan, or are afraid of their employees trying to find other work, but the result is the same, not a clean break allowing the employees to be caught by the safety net.

other than that, get prepared for bridge loans if you need them.  They will be coming at least here.

[dominattorney]

2 hours ago, HarveyBoulevard said:

I am a criminal defense attorney and in Lieu of having clients come in and see me face-to-face, I have started doing FaceTime and Skype new client meetings. Has been working well. The only downside is they have closed the courts for three weeks so the sense of urgency is not quite what it was a couple of days ago.

I went through the budget yesterday and slashed everything that is not essential. Go through your expenses and cut the fat. You can always expand in the future but only if you survive the present.

I canceled the after hours and weekend answering service. I will just forward the phones to myself and my partner and we will just spend the additional time taking new client calls ourselves. Money well saved and time well spent.

Same here, though time saved on intakes is time spent writing demands and settling up personal injury cases that were put on the back burner. Also hitting the court appointed criminal work hard so there will be cash coming in through April. Court closures means a lot of flat fee earnings in criminal work I counted on for april is getting delayed until at least june. Should be a lucrative summer if we can pull together and weather the eids of march. 

[Brian24]

I think El Pres hunted at it, but in contracts you are trying to avoid, review your force majeure clauses.

See if a pandemic constitutes an act of god in your jurisdiction. It probably doesn’t, but moving forward you can pay attention to the boiler plate and recommend including pandemic as declared by “XYZ” authority, e.g. the WHO, the state health department of Y.

-Healthcare regulatory/corporate lawyer.

[dshot]

I think a saving grace if your business is fit for it is no month-to-month contracts for services rendered - do a 6-month or 12-month contract. I mean you'll still have push back if they want out but it's not as easy. The event business is dead here for who knows when - IT's already cut my business down by 50%. Thank god I diversified my book of business or I'd be up shit creek without a paddle and tapping into savings. Keeping the lights on and food on the table for my wife and 1 year old son is my number #1 priority.

 

[Thirds]

Slower times are good times to visit with customers, call on customers you haven’t heard from in some time and generally focus on housekeeping duties that were put on the back burner when you’re too busy to devote attention to them.  
 

Industrial and commercial construction remains steady in our region although we have been banned from several food production facilities and a large retailer data center.  Fortunately we are diversified and can reallocate manpower to other projects.   
 

Typically at Christmas we are distributing substantial bonuses to employees and I have suggested to our workforce that bonuses may be suspended if works slows in favor of keeping employees with 40 hour paychecks during the slow period.  1) it reassures them that we are focused on keeping their income steady and 2) prepares them for the possibility that the bonus check may not be there at the end of the year.  
 

Fortunately our balance sheet is solid and we can afford to weather some bumpy roads ahead but it didn’t stop me from reaching out to our suppliers reassuring them of our financial strength and letting them know we can pay faster if they need it in return for a little larger discount.   I’ve spoken with several of our larger customer concentrations to ensure they are on sound footing as well (the only thing worse than no business is bad business).  I also reached out to our banker to advise him of our backlog, reassure him that work remains steady and sought reassurances from them that our line of credit remains open should this economic setback linger longer than expected. 
 

In times like these, it doesn’t hurt to up the hustle a little more as well.  Opportunities come to those that create them.  Think outside the box. 
 

This, too, shall pass.  Deals happen in good and bad times. 

[rcarlson]

I've got most everyone "working" from home (lawyers/staff), and I am really reluctant to cut pay in the short term.  I manage a mid-sized firm and have a lot of peeps to look after.  And it's gonna hurt, hurt, hurt. I'm hoping my commitment to taking on the bulk of the suffering for now will be rewarded when things get back to normal.  But I don't mind saying that no matter how much everyone is willing to pull an oar to keep moving, while overhead remains the same the largest burdens fall on the partners. I feel like I can't caste a lot of our financial concerns on the staff though.  Uncertainty coupled with lack of control and knowledge of the bigger picture is mighty unsettling to the paycheck crowd.     

We're all in different lines of work, but for those that have tight-knit groups, I took my cues from Rob and started daily videoconferences using Zoom Meeting to maintain oversight and accountability, prevent bad habits from developing in the absence of them, and just say "hi, how's everybody holding up, is there anything you need help with?"  I think the video bull sessions blow away conference calls.  It just seems more personal and helps give a feeling connectedness that is totally lacking when you're not able to interact like you do at the office. 

Other than that, I agree with Thirds. Slower times are good times to visit with contacts, call on clients/lawyers you haven’t heard from in some time, and generally focus on housekeeping duties that were put on the back burner.  I figure we're like sharks.  If we don't keep swimming forward, we will drown.       

[Thirds]

It appears some relief is on the way for those impacted by the virus.  Doesn’t sound like it will be the easiest to implement from an accounting/payroll process standpoint but a good benefit for those directly impacted. 
 

https://www.bkd.com/alert-article/2020/03/families-first-coronavirus-response-act-provide-employer-tax-credits

[rcarlson]

4 hours ago, Thirds said:

It appears some relief is on the way for those impacted by the virus.  Doesn’t sound like it will be the easiest to implement from an accounting/payroll process standpoint but a good benefit for those directly impacted. 
 

https://www.bkd.com/alert-article/2020/03/families-first-coronavirus-response-act-provide-employer-tax-credits

I mistakenly reported the original House bill as an executive order in Rob's video herf, and was near suicidal.  Couldn't think of anything more punishing to small businesses with a "potential" tax credit unavailable until next year after the employers had to foot-the-bill at the exact same time their revenues are being decimated, and with self-determined leave by any employee.  

Hadn't looked carefully at this version that apparently made it through the senate, but it appears to have exemptions for companies employing less than 50.  If so, thank God.  

When I do get a more careful look, I am hoping it's not as ham-fisted as it appeared at first blush.  Employers need to still be around when we get through this.  Small businesses need to be protected, not reflexively held to some politicians view of what moral obligations they owe to others IMO.  If there's anything Congress doesn't understand, it's the frailty of small business.     

[Thirds]

23 minutes ago, rcarlson said:

I mistakenly reported the original House bill as an executive order in Rob's video herf, and was near suicidal.  Couldn't think of anything more punishing to small businesses with a "potential" tax credit unavailable until next year after the employers had to foot-the-bill at the exact same time their revenues are being decimated, and with self-determined leave by any employee.  

Hadn't looked carefully at this version that apparently made it through the senate, but it appears to have exemptions for companies employing less than 50.  If so, thank God.  

When I do get a more careful look, I am hoping it's not as ham-fisted as it appeared at first blush.  Employers need to still be around when get through this.  Small businesses need to be protected, not reflexively held to some politicians view of what moral obligations they owe to others IMO.  If there's anything Congress doesn't understand, it's the frailty of small business.     

It’s a shame they don’t ever think of consulting us for our opinions!  I’m all for supporting employees during this challenging time but it cannot be a detriment to the business as a whole and it cannot place undue burden on the owner.  Layoffs may become a reality in my own business but it’s not out of selfishness.  Those decisions are made to keep the ship afloat. 
 

Interesting times, indeed 

[dunhamrocco]

My daughter owns a small business, she’s not laying off anybody but will let go of her office. She and her staff will be working at home. I think she’s planning to move to a diiferent location anyway, but this speeds it up. Personally I've been scrolling mortgage reviews to get some financial help