As states begin to relax the shutdown restrictions and more businesses re-open, it is time to prepare. While it would be great to re-open to business as usual, that is simply not the case. Businesses must be prepared to stay afloat in an uncharted environment and to adjust to a new normal. It is necessary to protect your business and your employees.
While not all challenges can be predicted, here are a few that the experts anticipate and their advice on how to survive.
According to Marilyn Landis, CEO of Basic Business Concepts, which provides CFO services to small companies, “We’ve got to start thinking about how we start planning for the spotty, sporadic opening and how we reach across to our vendors, our customers, and our employees to begin to function again.”
Use Capital Cautiously
The first round of funding through the Payment Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program have been exhausted. Nonetheless, a second round of funding has been approved. If your business is eligible, continue working with your bank quickly to get in line for the PPP because these funds will be exhausted fast as well.
Regardless if you have secured a PPP loan or not, B2B’s can plan to take advantage of alternative funding sources such as invoice-based Accounts Receivable loans.
Cash flow planning is critical during the dip caused by COVID-19. Develop a plan for a phased re-opening and understand how your business could be impacted under multiple scenarios. Make sure your plan adequately covers your business’s cash flow for your best estimate of a new normal.
Cut Cost Wisely
Manny Cosme, president and CEO of CFO Services, which provides CFO and bookkeeping services to small businesses, offers this advice. While businesses in a cash crunch often start making cuts to reduce costs, doing so can be detrimental in the long term.
“Before you make cuts, run that through your financial projections,” Cosme says, adding that companies ultimately need to think about growing their way out of this crisis. “Every cut that you make is going to cut your ability to generate revenue or keep your business going, which is not something you want to be doing right now.”
Revisit Your Business Model
Changing your business model is probably the last thing you want to do when you re-open, but it could be what keeps your business afloat. When revisiting your business model, ask yourself these questions.
- Was your business model working before the shutdown? If it was, how can you hang on until it is again?
- Have you considered multiple scenarios, based on what you have observed, as to how your business model must adapt?
- Are there ways you can pivot your expertise into a better revenue stream?
For Cosme, diversifying revenue comes down to changing one or more of the three following aspects of your business model:
- What you sell
- To whom you sell
- How you deliver
Prepare for New Vendors
Even if your business reopens, the vendors in your supply chain may not. That could require finding new vendors altogether, according to Landis, including companies that might require cash-on-delivery. “That’s a whole new cash need,” she warns. Another issue is having to ship your products to customers who may not be able to come to you. “You may have to incur costs for shipping or warehouse fulfillment if you want to continue to keep those customers,” Landis says.
Bring Employees Back
Recently laid-off employees may be reluctant to come back to work due to health concerns. They are now collecting unemployment benefits, and some are receiving an additional $600 per week through July as a part of the federal government’s recent stimulus package. Kimberly Weisul, Inc. editor-at-large, noted that convincing some of these employees to return to work could be a tough sell.
If childcare is unavailable to parents, flexible working hours or work-from-home option should be considered.
David Barron, a member of law firm Cozen O’Connor, believes that health insurance will drive most of the decisions to return to work.
Barron adds that employers should keep in mind and be prepared for employees to fall victim to the coronavirus and take advantage of the Families First Coronavirus Response Act, which requires some employers to provide paid sick leave or expanded family and medical leave for reasons related to Covid-19. This is yet another potential cash flow challenge.
Develop a Re-opening Multi-phase Plan
To protect your business and your employees, implement a phased re-opening plan designed to minimize exposure to the virus and to limit your liabilities.
All Phases
- Develop policies for social distancing, cleaning, business travel, and other areas
- Monitor workforce for indicative symptoms
- Develop policies for contact tracing following positive COVID-19 test Phases
Phase One
- Encourage telework
- Return to work in phases
- Close common areas or enforce strict protocols
- Minimize nonessential travel
- Special accommodations for members of a vulnerable population
Phase Two
- Encourage telework
- Close common areas or enforce moderate protocols
- Nonessential travel can resume
- Special accommodations for members of a vulnerable population
Phase Three
- Resume unrestricted staffing of worksites
Look to Your State and Local Authorities for Guidance
The re-opening can look different from state to state. The process will be similar, but the timing will be different.
Re-opening Tips
A rolling re-entry may make sense, especially for a geographically dispersed enterprise.
The new workplace will be more mobile and flexible than it was prior to COVID-19.
Accommodating vulnerable people will be especially important throughout the process
HR policies and employee engagement strategies need to be reviewed and adjusted to accommodate the different phases of ramping up your workforce.
How We Can Help
If you are a B2B with outstanding invoices, contact Allied Financial Corporation and let us help you get the funding you need with an accounts receivable loan.
Read also:
Coronavirus Attack on B2B Companies: How to Survive
Coronavirus Business Insights: What to Expect, How to React, and What’s Next