Business owners preparing to reopen shouldn't expect a return to business as usual. New safety regulations and consumer behaviors will force many businesses to rethink fundamental aspects of how they operate. For many business owners, just keeping staff on payroll will be a huge challenge, even if you've received Paycheck Protection Program funds. This is where entrepreneurs need to get creative.
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 U.S. Chamber of Commerce, on Friday, May 15.
"Coming out of the recession, there were many employees who were willing to take concessions on pay to stay employed," Landis says. "With the high unemployment rates we have right now and the dramatic shifts going on in our economy, we may have similar situations where, if there is work for the employee to do and a benefit for their future, they may be willing to work with you to help keep them employed."
Here are three ways to avoid pitfalls while reopening your business.
1. Spend cash wisely.
Regardless of what industry you're in, you probably shouldn't expect customers to return as often as they did prior to the coronavirus pandemic. Here are the questions Landis advises asking to determine how to spend cash wisely in the new environment.
- Who are your new customers in this new world?
- Where are you going to find them?
- What staff and cash do you need to execute your plan to reach these new customers and get them to buy from you?
- If you pivoted your business in some way, what are your new profit margins?
"By answering these questions, you've defined what your cash need is and you've prioritized the order in which you want to pay that cash out," Landis says.
2. Have a disaster plan.
One risk every business owner needs to keep in mind is the possibility that after reopening, an employee could test positive for Covid-19. If this happens, business owners need to comply with the Centers for Disease Control guidance and other guidance that is specific to your state, advises Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce. "Some states have very strict protocols about contact tracing and what you're supposed to do when quarantining individuals," Bradley says. "You're going to want to follow those." He adds that following the deep cleaning and disinfectant procedures laid out by the CDC could require you to temporarily close your business.
3. Prepare for rule changes.
A bill making its way through the House of Representatives could lead to legislation extending the eight-week period under which companies must spend cash provided by the Paycheck Protection Program. The rule that businesses must spend 75 percent of PPP money on payroll expenses could also be changed. For businesses that have already begun dispersing PPP funds according to the existing rules, having thorough documentation of all business expense decisions could increase the chances that you won't be held to the previous rules, advises Landis.
"Because we are in a state of flux, you document every decision you make, you write down the argument you made at the time, what was going on in your head," she says. "Put it in an electronic file or paper file so that when the rules change retroactively and you're impacted by that change, you can make a case for an exception."