At this point, the initial round of PPP has been allocated — and you’re either ecstatic that you received your money (unlikely) or you are waiting for Congress to replenish the funds (very likely). If you fall into the former category, the PPP funds unfortunately are not a cure-all. All business owners are standing at a fork in the road whether they like it or not.
Here are some potential action steps to consider in order to prioritize the health of your business:
Evaluate all cash outflows and determine if they are business critical or not. During these uncertain times, many companies need to anticipate that their business will contact in the short-term. To the extent possible, cash inflow should match cash outflow. Banks’ lending abilities are strained due to government programs created by CARES, and it will be difficult to acquire new loans. As a result, iIt is imperative to keep your business as lean as possible and rely on internal cash flow sources until the economy returns to pre-COVID-19 normalcy.
Take a hard look at Payroll and Rent/Mortgage.
Payroll: The onset of COVID-19 and the ripple effect on the economy has forced all business owners and entrepreneurs to scrutinize their number of employees. Whether you have received PPP funds or anticipate that you will in the near future, it is shortsighted to believe that the potential forgiveness of payroll from the PPP should allow you to keep more employees than you need. The payroll costs you will save will only cover eight weeks, but what happens if business doesn’t pick up after July 1st? This is a prime opportunity to evaluate the top employees in your organization and figure out ways to invest more resources in these A-players.
Rent: Now that many of us are doing business virtually (and it’s working), it’s time to evaluate whether you need designated office space. If you’re focused on your customers and they respond well to remote connections, do you need a centralized location? Look at the way you are currently doing business and ask yourself: “Hey, does this work?” Tech tools and apps have helped support this change in culture. Now is a good time to evaluate rent costs and determine what is truly needed for your business down the road.
Adapt a new MO: Although our current health crisis is temporary and will soon pass, it is highly likely that we will have lasting effects on business structures going forward. In a recent Harris poll of the SMB community taken during the past 30 days, 83% stated that they have cut costs and 66% of that group feel it will be enough to sustain them during this crisis. Simultaneously, 78% of those polled have made strategic investments addressing the infrastructure of their core processes and procedures designed to yield long-term results, i.e. marketing, IT-related expenditures, job roles, etc. This poll clearly indicates that the SMB community as a whole is taking steps to adapt to the changing business landscape by adopting technology-driven solutions and a contact list.
Take-away: It is easy to be disappointed, and even angry, if you are one of the many companies that has not received funding under the PPP. However, do not let this distract you from focusing on the long-term health of your business. Use this time to figure out what people, processes, and products are necessary for the survival of your business. Contact us if you need help evaluating the best trends and techniques for your industry and business.