Companies that are preparing to reopen in the coming weeks still need to be in “survival mode” if they want to outlast the impact of the coronavirus pandemic.
That’s according to Marilyn Landis, CEO of Basic Business Concepts, which provides CFO services to small companies. Landis spoke at the National Small Business Town Hall, a live webinar hosted by Inc. and the Chamber of Commerce Friday, April 17. While emergency relief funding is on the way for many companies and some regions of the U.S. are expected to reopen in a matter of weeks, business owners must focus on keeping their companies afloat in a new environment, says Landis.
“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.”
Here are five things to incorporate into your plans for how to resume business.
1. Cut costs wisely.
While businesses in a cash crunch often start making cuts to reduce costs, doing so can be detrimental in the long term, according to panelist Manny Cosme, president and CEO of CFO Services, which provides CFO and bookkeeping services to small businesses.
“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.”
2. Bring employees back.
Recently laid-off employees 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. Inc. Editor-at-Large Kimberly Weisul, who moderated the panel, noted that convincing some of those employees to return to work could be a tough sell, either because of health concerns or other reasons.
“I think the answer there is health insurance,” said panelist David Barron, a member of law firm Cozen O’Connor. “Being able to say, ‘Look if you don’t come back to work, we’re going to have to let you go and you may lose your health insurance.’ I think that’s driving a lot of the decisions.” Barron added that employers should keep in mind that some employees could come back to work and immediately 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.
3. Revisit your business model.
Switching up your business model may be the last thing you want to do when you reopen, but it could be what keeps you in business. Landis advises asking yourself the following questions:
- What should your business model be when you come out of this?
- Is your current business model viable? If so, how can you hang on until it’s viable again?
- Are there ways you can pivot all of 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.
- Who you sell it to.
- How you deliver it.
4. Consider 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.
5. Tap into local programs.
While many business owners have been focused on the federal government’s Paycheck Protection Program and Economic Injury Disaster Loan program, additional resources are available at the state and local level, such as local economic development groups and community development financial institutions, Landis notes.
“[Business owners] need to look into their community,” she said. “Many landlord groups are coming together to try to provide some ease for their tenants because they want those buildings occupied again when it’s over.”
On Thursday, the Chamber of Commerce launched the Save Small Business Fund, which provides up to $5,000 for businesses that employ between three and 30 people, are located in a “vulnerable area,” and have been affected by the coronavirus. For more resources, check out Inc.’s financial assistance and grant program trackers.