To all small business owners:
I’m not going to sugarcoat it, these next few months could get pretty bad for small business, so I’m putting together an Action Plan to help us survive and thrive. The government is stepping in but let’s get clear on exactly what our next steps should be.
Always remember that great businesses have survived and even been created during recessions or disasters so stay healthy, keep your mindset positive and let’s get to work.
I believe we should all focus on these main things at the moment:
Step 1: Do a Quick Break Even Analysis
You need to know how much money you need to keep operating on a monthly or even weekly basis. So fire up a spreadsheet (this doesn’t have to be perfect, just get some numbers down) – I’ve made one for you here – and open your accounting software or books and calculate the expenses which are “fixed” and you cannot quickly change (realistically). This would include things like salaries, rent, utilities, software, insurance, etc.
Then add your income from all sources. Just go through your monthly profit and loss statement and add any of these items to your spreadsheet. I would do a “recent” month to see what’s normal and then a “worst case” to calculate the total to see what we’re dealing with.
If it’s negative (and it likely will be), then we now know roughly how much we may need to cut (or lower prices, etc. to boost sales).
NOTE: If you want to dive into the numbers further, you can calculate your variable and per-unit costs as well. This is a good article to follow for that.
Step 2: Reassure Customers and Pivot If Necessary
If your business has not been closed down then make sure to reassure your customers you are open either via email, signage or even call them and then let them know your action plan. See our action plan here for some ideas; here’s a template you can use as well. Mostly, you want to assure your customers that you are open and are taking precautions for your employees and customers safety.
For example, if you run a restaurant, you’ll want to mention how you’re using gloves, masks, increased sanitizing schedules, etc. to make people confident they can order from you. Basically, if you handle any physical items that a customer will receive you need to reassure them you’re taking precautions.
Some businesses may consider a quick “Pivot” in their business model to deal with the virus. For example, if you’re a restaurant, consider adding delivery or take out. If you sell physical items retail, it’s time to consider shipping to customers if you don’t currently (setup a website as well if you don’t have one). If you typically cater to large events, consider smaller venues or pivot towards smaller events or individuals.
NOTE: There are many quick ways to get an online website and ordering system setup that require “no code” – try Makerpad for example who is offering this for free right now. Yorcue is doing this as well and has an app that can schedule pick up and delivery for your business.
For example, most of the Las Vegas Strip has been shut down but the meat and restaurant food providers are making menus and posting them on Facebook to sell that food to individuals. If you run a landscaping company, you could add on services like delivery or trash disposal for customers. Get creative and see what you can pivot towards for the down turn.
Look how fast this company pivoted:
Other quick business ideas:
- Cleaning and sanitizing services
- Sanitizer and mask manufacturing
- Task services: delivery of anything by trained and sanitized staff
- Remote office consulting and setup
- Twitter thread: What new or existing companies will thrive during coronavirus?
- 10 Industries that will be winners in the stay-home economy
- 100+ Ways to Make Money on the Internet
- Some companies are offering their paid training and other software or resources for free.
Step 3: Cut Expenses
We’ve had several years of a really good economy and I think a lot of us have allowed various things to crawl onto our credit card statements and into our payables inbox, and we just sort of dismissed them. Now’s the time to go through those and cancel, reduce or renegotiate those services.
So go through each item on your spreadsheet and see what you can do to reduce these. The spreadsheet I provided has a column for that. Think outside the box here: call your landlord (or any vendor) and ask for a discount, delay of 30-90 days or similar.
People are going to be understanding now while the panic is starting, but not necessarily in 2 months so start now. Your pitch to vendors like landlords: “I can pay you partially/in 30/60/90 days or I can go out of business and not pay anything – what would you prefer?”.
Unless your business is very dependent on something that is essentially shutdown (travel, sports, events, etc.) then be cautious about dialing back advertising or marketing at this point. You may want to closely review your accounts and trim the fat but don’t fail to get the word out at all. Remember that many businesses thrived in recessions or depressions.
Next, be very, very cautious about cutting salaries, reducing hours or benefits until you have all the information about what the Small Business Administration or Federal Government may provide you (see below).
Cutting people, salary, hours or benefits will likely have a demoralizing effect and you don’t want to do it more than once if absolutely required. At the least keep communication very clear with your staff – some may actually volunteer for reduced hours or even a 30 or 60 day furlough to spend more time at home.
Personally, I would try to cut other expenses, boost sales and/or pivot (see steps below) first before cutting staff.
Step 4: Boost Sales and Cash Flow if Possible
Now would be the time to run any promotions, sales or specials. Cutting prices may be unavoidable to just get cash flow going. So consider having a sale and make sure to promote it after reassuring your customers.
Local businesses, if you have gift certificates then now is the time to promote them. A lot of people want to support small business now and that’s by far the easiest way to get cash in your pocket now. Some places are offering the equivalent of a bond: pay $75 now to get $100 in the future, etc.
If you have outstanding receivables you may want to follow up with those, especially from customers who can easily weather the storm. Also, be careful of taking on new customers that may not pay so be very careful about extending credit without proven payments or deposits.
Recommended Article: Marketing Your Way Through a Recession
Step 5: Understand the Families First Coronavirus Response Act (FFCRA), CARES Act (H.R. 6201) and Federal Grants and Loans
The bill was just signed into law and provides mandatory paid sick time and other long term leave for those diagnosed or helping others with Covid-19. It applies to businesses with fewer than 500 employees (but those with 50 or fewer may be exempt). Here’s a few summaries:
- IRS Summary of the Bill
- Employer obligations in the new bill
- What employers need to know
- What does it mean for working Americans
- What it means for small business
- Summary of the CARES Act
- Another summary from Reddit
- Emergency Loans summary from US Chamber of Commerce
We will update this post with a checklist of items for small business employers as we learn more, but for now, those articles above seem to be the most comprehensive. Please leave a comment if you have a better link or more accurate information.
There are really good sources of funds available right now. So much so that we’ve written a separate post on How to Get Covid-19 Funds For Your Small Business.
Other Sources of Loans:
- Kabbage – Loans & MCA
- BlueVine – Loans
- Clearbanc – Loans
- PNC – Line of Credit
- Forward Financing – MCA
- Total Merchant Resources – Loans & MCA
Fundraisers and More:
Some small businesses have started raffling off prizes and starting a “GoFundMe” page to get community donations and support. Quickbooks is sponsoring GoFundMe’s as well.
Here’s a list of Small Business Relief programs by state.
Have any other advice or tactics that can help? I will continue to update this page with everything I can. Leave a comment below or email me matt – at – mycompanyworks.com.
Please stay positive, healthy and safe!