There is no doubt that small businesses have been severely devastated by the COVID-19 pandemic. Despite Congress approving an unprecedented $700 in stimulus money to help them, experts are saying that more than 100,000 small businesses have permanently shut down since March. Analysts warn that this is just the beginning of the worst wave of small business closures since the Great Depression.
No one has a crystal ball to predict what the future holds. But there are a couple of practical suggestions you may find useful to give your business a better chance of surviving this pandemic. Of course, every situation is unique, and what may apply to other businesses may not apply to yours. So use your best judgment.
First of all, please do your best to remain calm and take care of yourself and your family FIRST. I know this is easier said than done especially when your business is running out of cash. But remember that the purpose of your business is to serve you. Before creditors get paid, you need to pay yourself first. I am not suggesting that you ignore everything else but your strategy for personal survival should be your top priority.
I know that you are feeling the most pressure in your life. You are worried that your business might fail. You may lose everything that you have worked so hard for. Your creditors will eventually sue you. The pain may extend over many years. You’re concerned that bankruptcy may be inevitable and that your efforts may be wasted.
These are all legitimate concerns, and yes, you should worry- but do not lose heart. Like all other problems you have had in your life, you will eventually overcome all these difficulties. It is OK to feel all the emotions you are feeling. But at some point, you will come to realize that remaining in fear will get you nowhere. Only taking action will give you the best chance of turning things around.
Secondly, it is advisable that you make a 90-day plan for your business while allowing for flexibility. Keep in mind that this is a dynamic, fluid situation. Things can change at any time. Avoid being rigid in your thinking.
Review all the essential and key expenses that your business needs- payroll, rent, utility bills, supplies, etc. and cut out the fat. If you have anxious creditors or suppliers breathing down your neck, remember that they are most likely struggling just like you. This is the time to talk to them and see how you can continue the business relationship without much interruption. Do not ignore them. If you have not paid your landlord for the last few months, ask them how you could make up the rent payments you have skipped. If you call creditors to explain your financial hardship, there’s a chance that they already have options in place to help you temporarily as you try to revive your business. If you don’t call them, you’ll never know.
You must start putting together a plan immediately to give your business its best chance to survive. If there are unpaid debts that could lead to a lawsuit or judgment, seek the advice of an experienced bankruptcy attorney immediately before things get ugly. If you have personally guaranteed the debts of your business, you may also need a plan on how to protect your personal assets. The earlier you come up with a plan, the better for you instead of waiting the last minute.
(None of the information herein is intended to give legal advice for any specific situation. Ray is currently offering free phone consultations to discuss your personal situation. You can call his Valencia office (RJB Law) at 866-477-7772 or (661) 775-4880.