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This is the first in an ongoing series of posts aimed at small to medium-size business owners navigating the Coronavirus (COVID-19). Our aim is to post actionable advice that builds to a “Toolkit” of information to help you navigate the “new normal” business climate.

Nearly no one has escaped the reach of the Coronavirus (COVID-19). Some are speculating Coronavirus searches may be the biggest trend in Google search history. From virtual work to schools and restaurant closings, as well as ever-present health concerns — especially for our elderly population — this virus continues to leave its mark. But no faction of the United States may be hit fiscally harder than our nation’s 30.7 million small businesses.

Financially strapped in the best of times, many small businesses (SBs) scrape by with the help of friends, family and a robust economy. Coronavirus has changed the landscape, indefinitely.

While no one can predict how a Coronavirus-filled world will play out, an actionable plan for how to survive amidst the chaos is a great first step. Devising a plan to mitigate losses, keep your business in the heart and minds of customers, and offer support to employees is key.

No matter your industry, these 7 steps can help you prepare your business for what’s next:

1. Gain a degree of control for yourself and employees

Why you need to feel in control

The psychology of fear is very real. Non-stop news cycles perpetuate virus “availability bias,” meaning we tend to fixate on events that are top of mind. Make it a habit to check in on news cycles once or twice a day, no more.

Your employees will be looking for guidance, too. Empowering employees with a sense of control over their work lives, despite all the uncertainties, will help them function more effectively.

How: Be flexible with employees

First of all, communicate with them. Whether your business remains open (albeit with reduced hours) or has gone remote, ensuring your employees feel a part of the plan will allay some of their fears and keep them better-engaged.

Consider reducing or cancelling all in-person meetings. This includes conferences, client meetings and weekly check-ins. With remote work, kids’ school closures, sickness or on-site restrictions, employees’ worlds are changing.  

Be understanding and make a plan that’s well communicated. According to the CDC, your plan should be flexible and include employees’ insights. It’s vital to share and explain the plan with employees and explain what HR policies, pay and benefits will be available to them. As you implement your plan and find potential problems, share best practices with other small businesses in your community (via online communication) to improve your community’s response efforts.

2. Cut costs where possible

No one knows how long we’ll exist in this Coronavirus-state. Cutting costs anywhere possible is imperative.

How: Find out where your small business will take the biggest financial hit

The NFIB Research Center reports nearly one-quarter of small business owners claim the coronavirus outbreak is negatively impacting them in the form of slower sales (42%), supply chain disruptions (39%) and sick employees (4%). 

How: Find ways you can cut

It’s difficult to make decisions that affect not only you, but your employees. However, you have to be honest with your sales forecast for the year, and how your business may bounce back after the storm passes. This likely means you’ll need to cut back in some of these areas:  

  • Sponsored posts and search engine marketing. In its place, go back to the basics of organic search and connecting with customers on social sites. The more money you can save, the longer you can stay in the green. Start by standing out with a strong website.
  • Work trips and new hires. If you were already strapped for manpower, this might be hard on your business. Do your best to improve morale by thanking employees and potentially offering a weekly allowance for coffee or a meal while working from home.
  • Client meetings. Use video to communicate and influence. When you’re unable to physically meet with customers, get inventive with videos. A clothing boutique could create a YouTube channel with ads that show fashion trends and ways to look good while in self-quarantine.
  • Utilities. If you’re still operating, consider shortening your hours to lower the electric bill. If you have work phones for employees, you might cancel service on them for a while until revenue kicks back up.
  • Your work force. If you’ve cut costs in every way you can, read Finance Fundamentals to help you chart your new financial picture. Harvard Business Review’s ideas on how to avoid cutting employees help you resort to layoffs as a last choice. Even given the unpredictability of recovery and the pace of reentry, odds are you’re still going to need your workers again in the future. Recovery planning, skills training and even new product innovation are ways to “employ” your employees during a down period, in lieu of letting them go.

3. Give employees a leave of absence

When this might be necessary

Unfortunately, it’s possible you won’t be able to pay employees during this time. If you can’t reach your sales goals, you might need to ask employees to take a leave.

Before you do this, take a look at your lean business plan. Even if you already have one, a lean plan can help you recalibrate what’s essential for the future of your company.

Ramifications for small businesses

  • There will be less help to manage business and you may need to ask friends or family to work for free to stay afloat
  • Employees may leave to find paid work, and finding good replacements could be a challenge
  • Make a strong, clear plan and communicate expectations to employees, including whether or not you intend to pay them during a leave

Ramifications for employees

  • Person remains an employee but may not receive pay or benefits
  • Employee morale and respect may decrease
  • The social and mental health of being isolated and unable to work is a concern

How to ask employees to take leave

Often, employees become friends. To keep relationships intact, make sure to be understanding when broaching the subject. Here are some tips:

  • Consult with HR or a lawyer. You may want to get legal advice before asking employees to take leave to protect yourself from a lawsuit and draft any needed paperwork.
  • Clearly define the need for employees to take leave. Be as specific and empathetic as possible when you explain how COVID-19 will impact the business going forward.
  • Set expectations for when the employee can come back. Reassure them that they still have a job and you will keep them in-the-loop as to return timing.

4. Loans available to small businesses

Disaster assistance loans from the SBA

The SBA recently announced that it will provide assistance loans, AKA the Economic Injury Disaster Loan Program, for small businesses impacted by COVID-19. It will offer up to $2 million in assistance for a small business to “help overcome the temporary loss of revenue they are experiencing.”

Who it’s great for: Businesses that are being hit hard from COVID-19 and need assistance to stay open.

How disaster assistance loans work

Under the authority granted by the Coronavirus Preparedness and Response Supplemental Appropriations Act, the SBA will work with state governors to provide low-interest disaster recovery loans to businesses that are severely impacted.

Once a request is received from a governor, the SBA will issue an Economic Injury Disaster Loan Declaration. According to the SBA, the loans:

  • May be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.
  • Have an interest rate of 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible.
  • Have an interest rate for non-profits is 2.75%.
  • Offer long-term repayments (up to 30 years) in order to keep payments affordable. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.

Home Equity Line of Credit (HELOC)

HELOC is a loan available to people with equity in their house. It’s a way to get extra money to cover expenses. It works as a revolving line of credit that uses your home as collateral.

Who it’s great for: Businesses that have lower risk of closing. 

When a HELOC is the right choice

The great thing about HELOC is that the interest changed is often lower than a credit card. To get started, you’ll need to:

  • Submit an application. Lenders want to know the value of your home, your debts and credit score.
  • Submit proof of employment and income.
  • Know how long you want the HELOC. According to debt.com, 30 years is common.

Before deciding on HELOC, make sure you can afford any upfront fees and can afford an interest rate increase. As HELOC’s are adjustable, it’s important to shop around and make sure you’re getting the best deal.

5. Create a communication plan for customers

Why you need one

Let your customers know you’re still there for them. Keep them in-the-loop on any changes to your businesses hours, products and/or services, and policies.

How to keep customers in the loop

Besides your business operations, tell customers how you’re preventing the spread of disease and what will happen to the employees that count on you for work.

Find examples of businesses that are keeping customers in the loop and borrow what you think is working. Notice which messages make you feel empathetic and which turn you off.

Borrow language that’s straightforward, calming and honest: Many restaurants are doing this well, posting warm, neighborly messages to long-standing customers, expressing their gratitude for past business and support.

If you’re still able to open, communicate verbally or through signs on doors or tables that tell customers what you’re doing to keep everything clean and safe.

If you’re an online business or unable to operate during this time, update customers through email and social posts If you’re able to sell things online or plan to deliver, share that information. It’s also a great place to inform customers of what they can do to stay healthy, thus showing you care.

People check online for updates. So, be there.

6. Take your business online

If you’re already online, keep the communications coming and send emails that prompt customers to shop for their favorite items. Since customers are staying home, capitalize on that with your messaging. Consider coupons that bring positivity, such as “15% and a whole lotta faith that this will pass” or something attention-grabbing. Match your messaging to your brand’s personality.

It’s a great time to expand your reach, as those who normally would’ve shopped in person may come your way. To help you communicate with new target groups, we have an article to help you personalize your messaging.

To keep employees on the job, stretch their skillsets. Find new ways to use your employees by having them focus on social posts, writing emails, re-designing your website or brainstorming a future loyalty program.

7. Look to others for support and ideas

Stay up to date with your state’s chamber of commerce for resources and the latest information. Also, try these methods:

Get inventive

In the event you have to shutter your business for a time, follow inspiration from Om Nohm Gluten Free, a bakery and café run by Jessamine Daly-Griffen. With a massive shutdown impacting New York businesses, Daly-Griffen has a lot to think about. Instead of panicking, she is looking at ways to help bring food to the community and pay employees. She put together an actionable plan:

  • Use the bakery’s food truck as a delivery tool to reach customers
  • Offer limited lunch options for pre-order and takeout only
  • Create a subscription bakery box to mail to customers

Her quick thinking reminds SBs that there is hope and there is always somewhere to focus your attention. So, take a hard look at your business and find the opportunities. A nail salon could start selling polishes online. A floral shop could switch the business to delivery-only for a few weeks or months.

Learn from other impacted countries

We can learn from China's mistakes and successes as they provide a blueprint for what may be to come. If other countries have similar outbreaks, companies will need to worry about in-person traffic and getting the supplies they need to run the business. On a positive note, Harvard Business Review reports that China is in the early stages of a rebound as the movement of people and goods picks up again.

Italy’s citizens and businesses are focused on taking care of those important to them. In response to the Coronavirus, many businesses have moved to working remotely since staff is a priority (followed closely by financial survival). To prepare for worst case scenarios, some businesses are enacting succession plans and focusing on careful cash management (i.e. cost cutting measures).

The adage, “Have a plan and work your plan” is still true. Yes, this “plan” seems to be changing day-to-day, but the resolve and momentum having a plan provides you, your employees and your customers cannot be minimized – especially in turbulent times.

The information provided in this blog does not, and is not intended to, constitute legal or financial advice.

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