Now What? Business Guide for Covid-19 (and -20 and -21)

Covid-19 social distancing billboard for businesses by bizhippo in houston texas.

As things are being cancelled across the United States, businesses, particularly small ones, are concerned about what the future will hold and how it will affect their and their employees’ livelihoods.

I think the Covid-19 virus is a threat to our country’s health and health care system and I do think re-evaluating large gatherings is the right step towards, at the very least, slowing down the outbreak. At best, it could prevent millions of people from getting it at all. Covid-19 is a math problem. One person exposes 50 people, who expose 50 more — you get it.

This reminds me of when a hurricane is in the Gulf of Mexico. In coastal cities, you prepare as much as you can. You wait, and wait, and wait, and wait, and then it’s over, many times with no effects whatsoever. Other than your family had way too much quality time, the house is a mess (oh, not from the weather — your family), and you bought way too much bread.

My prediction is that the country has a hard two to three weeks ahead of us where we assess where the virus has already taken hold, how fast it is spreading, and how our health system can respond. Then, we will start to slowly return to a more normal way of life while continuing to watch the spread. I wouldn’t expect gatherings of 1,000’s for a while, but I expect schools will start opening again in April.

That said, what do I recommend a small business owner do while we wait?

Obviously, I am not offering any advice on the virus itself. I’m sticking with the experts for that (unlike some of the people I’ve heard on the radio). Sources for first-hand information on the virus, itself, are available here:


1. Protect Your Employees’ Health and Finances

Work Remotely; Stagger Shifts

If employees can work remotely, help them do that. Issue laptops and Internet hot spots if necessary to keep everyone working. If employees have to be in the office, stagger shifts so only a few are there together at a time. Ensure that sanitizers are available and are being used on surfaces regularly.

If you have a public-facing business, provide protection for your customers and employees and follow good sanitation procedures. Most importantly, if an employee feels sick or thinks they have been exposed, have them stay home. You want to avoid a situation where all your employees are sick and the business can’t run at all.

Financial Assistance

Given that most (all?) employees rely on their regular paycheck, do what you can with available sick and vacation leave to accommodate them. Most small businesses are not a haven of excess cash, but working with your employees, you could come up with solutions that help them without breaking your business.

You can also check with your state’s unemployment division to see if they have special assistance programs available to your employees during a work slow-down or lay-off.


2. Conserve Cash

Slow Down on Large Cash Outlays

Hopefully, the business slow down will be for one to two months. But if it stretches on longer, having a little cash on hand can be helpful. Obviously, continue to pay what you already owe. Otherwise, you are just pushing your problem onto other businesses. However, don’t commit to any expensive outlays right now until you know more.

Make Minimum Debt Payments

Now is not the time to make a huge payment on debt. Unless it is on a Line of Credit and you can pull the money back out if you need it. But on term loans, once you pay it down, you are not getting it back. So for now, you might keep that money in savings and look again in four to six weeks to see how things are progressing.

Updated: Tax Filing & Payment Deadline Extended to July 15

Hurray! The IRS did extend the time for filing AND PAYING 2019 taxes. And depending on how long it takes the economy to recover, they might offer installment agreements to more taxpayers. Just make sure you are following their guidelines on payments — the IRS does not take kindly to taxpayers following their own payment schedule. You can monitor their website to see the latest.

Is Your Q1 Tax Estimate Too High?

Do look closely at your 1st Quarter Estimate due April 15. For many businesses, your accountant based it on last year’s taxes, which will most likely be lower this year as a result of the virus. Therefore, you may be able to pay a smaller amount or no estimate at all on April 15th. An underpayment penalty in April 2021 might be more palatable than making a large tax estimate right now.


3. Eliminate Unnecessary Expenses

This is always great advice, but particularly now. If there are items you spend money on that just aren’t that necessary or important, get rid of them. I’ve never found a vendor or service that won’t take your money again in the future if you change your mind! Not only will this contribute to the long-term health of your business, but it will also help you conserve cash during this slowdown.

Clean out that storage unit and get rid of it. Stop that software subscription that gets used once a year. Clean out and organize your office supplies so you stop buying paper clips you already had. Better yet, get rid of paper altogether!


4. Investigate Emergency Funding

Eventually, I suspect we will see more funding available from the SBA. But just like with any government financing, it probably won’t be fast. In the meantime, if your business has a healthy balance sheet and is profitable, you can usually get a line of credit from your bank in two to three weeks.

That said, I emphasize that this is EMERGENCY FUNDING. This should only be used to cover short-term cash flow issues arising from this slowdown and should only be what you can afford to pay back quickly when things settle down. Do not use this emergency funding to fund your business that was already in trouble or to pay unnecessary expenses.

This should be to provide you peace of mind that you have it available, not that you can continue to operate a marginal business, virus be damned. A safe amount of borrowing depends on your particular business. Just be aware that this is not the last or even worst emergency your business will face.


5. Take It As a Planning Opportunity

No, I’m not referring to the opportunity to sell hand sanitizer for $50 a bottle. I’m talking about the opportunity to use what is likely to be excess employee time or reduced client interaction time to work on your business. What project has your business been postponing “until you have more time?” This may be the time.

Here are some ideas of things you can tackle:

  1. Does your business have a disaster continuation plan? Does it cover things like quarantines, weather disasters, fires? What coverage does your insurance provide? And it is too high, too low, or too specific?
  2. Do you have a remote workers plan and policy in place? Do you need to implement one? How fast can you take internal employees and make them remote?
  3. Now might be a good time to clean up your technology. Stop paying for old technology services you don’t need (in-house servers, desktop software, etc.) and move to more hosted services. The good news is most hosted services you pay for by month, and the initial cash outlay for the software is small. Admittedly, the costs of converting can be significant if not handled by in-house personnel. However, even if you don’t make the complete plunge now, this might be a good time to do a small test on new technology before you attempt a full conversion. And, this ties in nicely with your remote work plan above.
  4. A good, old-fashioned clean-up of the work environment. Shred old files, donate old computers and furniture, and sanitize the heck out of every surface.
  5. Get your business documentation established, updated, and accessible. Do you have personnel policies (a real one, not the one you downloaded off the Internet), standard operating procedures, document storage and retention standards, customer service standards, and policies? Oh don’t you worry, I’ve got a lot to say about this topic and I will. A post on business documentation is to come. I’ll also issue a 3-ring binder version.

Again, I think the hard part is the next two to three weeks. And I think this time makes all businesses better at preparing for the next hiccup (which I always warn, there is always another hiccup). So don’t panic, you don’t need excess toilet paper, and use this as a time to strategize for the future.

Here come the shameless plug. Now is a great time to work on your business — including hiring or replacing your accountant. Isn’t it time your business had one that cares about your most important asset?