I know some of you are in other parts of the world outside of the U.S., but wherever you are, be safe.
Now, if you have a storefront where you interact with customers, you’re business may be affected as well due to the coronvirus. If you haven’t already done so, be sure to utilize any government resources for your small business. Specifically in the U.S., the government passed regulations this week that gives $350 billion in loans to small businesses. This new program is called the Paycheck Protection Program. The goal is to loan money to small businesses cheap so that they will continue to employ people through the coronavirus crisis. Direct from the SBA website, “SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.” This is a small business lifesaver.
These funds do not require as much red tape as the other loans provided through the Small Business Administration. Even if your cerdit rating may not be that great, please go apply with any SBA lender. It is crucial that the national and global economy stays as much intact as possible and this is one safety net provided by the government. If you want information straight from the US Government SBA website, click here.
As another option or in tandem, you can also cut back in your business now. I mean, cut back on everything. Rents are due April 1st. Call the landlord and start renegotiating terms. Nike has already done that with their landlords. Nike is paying no or little rent in the short term but will pay the landlords more money when sales increase in the future. Be mindful that the landlords may not have cash to float all of their tenants or the landlords still have loan payments to banks as well. Landlords may not be able to give free rent but they may be able to accept lower payments now.
I can speak first hand on this. My previous background was in commercial real estate. During the financial crisis of 2008, I worked for the corporate office at Dollar General Corporation where we renegotiated most of the rents for over 7,000 stores. You have to ask the landlord. For your negotiating points, if you close your business, then the landlord has an empty space. More than likely, the landlord will not find an immediate tenant to fill it because the global economy will take a long time to recover from the shutdowns. However, at this point, landlords still have to pay real estate taxes, insurance, and maintain the property whether there is a tenant in the space or not. Also, the landlord may not have the cash to build out the property for a new tenant or pay a realtor commission. Work towards a mutual arrangement with the landlord and your business.
The next step is to hoard your cash, negotiate any vendor payments, or anything you can in your business to keep it afloat until you are allowed to operate at full capacity. Call any credit card companies for your business account and negotiate lower interest rates or get on a payment plan. Reduce your inventory on hand. Change your product offerings to match the new consumer buying behavior, i.e. offer delivery services, sell products online using Facebook or Instagram videos to showcase your merchandise. People are still buying products but are shifting to primarily online and delivery sales. Be creative and think outside the box while following guidelines, suggestions, mandates, or whatever newly imposed policies to keep the public safe.
If you are facing difficulties, be sure to reach out the local, state, or federal governments for assistance. There are lots of moving parts that are rapidly changing. Know that the end goal is to keep businesses going after the restrictions end and the pandemic slows.