The coronavirus or Covid-19 virus has put life as we know it to a grinding halt. In many areas around the globe, citizens have been asked to stay at home. If they really have to go out, everyone should practice social distancing. Non-essential businesses have also been asked to close in many countries.
For a small business with rent to pay and depend on walk-in traffic or person-to-person interaction, this is absolutely a nightmare. While dealing with the stress associated with the pandemic, small businesses face the incredible strain of losing their source of income while having bills to pay and the question of their business survival hangs in the air. The consequence of still paying rent on a store that is closed for business is a huge blow to a business already strained for cash. Sales are dramatically shrinking (if there’s any at all) as people stay at home and only focus on getting the absolute essentials of daily life. These are definitely trying times for most small businesses.
One of my friends operates a Little Gym franchise, and she said she is all for closing the business recognizing the risks to her customers and employees. While she understands the importance of measures intended to save lives, she is absolutely stressed where she will get the $11,000 for her monthly rent plus the other utilities and still provide the resources to help her employees keep their jobs.
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To help your small business survive the impact of coronavirus, here are some steps to take:
1 – Recognize that we don’t know when this pandemic will end
The biggest concern is how long this will all last. Your business could be closed up until the end of the month, or a month from now, or three months and more. Will your business survive three months of closure? This is the worst-case of all worst-case scenarios for business owners. It’s scary, and every small business owner will be racking their brains to do some deep planning and quick thinking in order to survive this crisis.
2 – If you have not yet done so, start conversations with your landlord.
If your business is essentially shut down for the duration of this pandemic and you have a brick-and-mortar store, talk to your landlord. Check if you can renegotiate the rent payment, or at least defer the paying of rent until this virus pandemic has been stopped and your business is allowed to open again. Some landlords may be open to work with their retailers on rate abatements or rent deferrals due to COVID-19, as they also don’t want to lose a batch of their tenants all at once. And if you get some form of rate abatement, you may be able to pay for your employees for longer. For some landlords, it will depend on your rental history and how long you have been in business with them.
3 – Review your contracts
If you have contracts with your landlords and vendors – especially if you are required to pay – now is the time to review them. Check the “force majeure” or “Act of God” clauses if pandemics are covered to help you justify suspending your payments.
4 – Determine if you can shift your sales strategy online
For some types of businesses, closing a retail store or physical office does not mean that the business should stop operating.
If you are not online yet, now is the time to quickly jump online to cut your losses and salvage some of your sales. It will not be easy, but building an online presence is something that you should have done yesterday. Build your website as fast as you can to move your business operations online as quickly as possible.
Think of what products you can sell online. If you are a nail salon, for example, check if you can sell retail items such as high-quality nail files, fungus treatment products, cuticle oils, heel treatments, and other beauty products. If you are selling in a retail store, get your salespeople to help out getting more online traffic and creating assets (videos, graphics, photos, blog posts, etc.) that can help you sell online
For those who have online presence set up, jumpstart your website and ramp up your online presence. Use your email list and leverage your social media platforms to continue selling. Create videos to help you sell your products. It will be a whole new way to operate your business, but some income is better than nothing.
5 – Look for loan sources
The government will be coming up with ways to help small businesses with low-cost loans and offerings. However, it is important to determine if you can afford more debt. Some small business loan programs will require collateral, so check if this is something that you can handle. Can you risk your home if you cannot repay the loan?
Check out government websites like the Small Business Administration to get updates on what financial resources are now made available to small businesses.
There are also alternative loan sources that you can use such as the PayPal Working Capital Loan, which you can get in less than five minutes without a credit check. They may end up being costlier and may not allow you to borrow for more than $25,000, but it can be a quick and easy way to get your hands on some cash if you have been doing a lot of business with Paypal.
6 – Check if you have business interruption insurance (and how it can help)
A business interruption insurance (also known as business income insurance) is a type of insurance that covers the loss of income that a business suffers after a disaster. Typically, it covers lost income from events such as fire or a natural disaster. The big question, of course, is whether this pandemic is covered. But it is certainly worth a try especially if you have been paying for this type of insurance.
These are really hard times. And the hardest part about making these decisions is not knowing what this situation is going to look like a month from now or even two days from now. It may be a while before your business can go back to normal. If your business survives, make a list of all the lessons you have learned and incorporate a disaster of this magnitude in your business strategy. In the meantime, be safe and heed the recommendations of the government to stay at home.
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