Will my business survive Coronavirus?

Will I survive Coronavirus? The bigger question: Will my business survive Coronavirus? We are in an uncertain time and none of us know for sure what tomorrow holds, much less next week or next month.

I am writing this article from the safety of my couch on a Sunday afternoon - too concerned to leave the security of my own home on a beautiful day that is screaming ‘come out and enjoy’. I am pondering several questions today: Will all of the employees show up tomorrow? Have any of them been diagnosed with Coronavirus? Will others have to self-isolate? Will my state force everyone to stay home for two weeks?

We cannot control much in our lives. We definitely cannot control this virus nor what the government is going to do to prevent people from dying. But, we can react to issues that we encounter with wisdom.

Businesses are organizations that provide services or products to other organizations or individuals. The bare basic definition: People that help other people in exchange for compensation. The point that I am trying to make is that your business is what it is today because of the people that make it up. People make up businesses. What are you going to do to protect and provide for your employees? Without them, your recovery will be greatly delayed. You need to do all that you can to keep them.

Your employees are just as scared about their future as you are. They are looking to you to lead them and make decisions that protect them and provide for them.

Don’t be naive about this issue - it is going to take a lot of money out of your pocket. I’m sure that you have already slowed down or stopped buying cars. You probably have not paid the bills to other salvage yards that are sitting on your desk. You probably still have a load of cats out back, but the value of them dropped 60-80% in the past 10 days. You probably have not received payments from your outstanding charge accounts this month-to-date like normal. Don't plan on those checks showing up in the same fashion as they have historically. In the US, the government is issuing laws and regulations that will require you, the business owner, to pay your employees for two weeks and take that amount as a tax credit in April, 2021 - they are ‘demanding’ that you make an interest-free, one-year loan to them in order to provide for your employees. What should you do?

Here are a few ideas, but seek legal advice before acting.
  1. Do everything you can to put money in the bank NOW
    • Call customers with outstanding debts to you and ask them to pay you with a credit card over the phone today. Forget about the transactions fees associated with taking a credit card - get the money. Offer them a discount, if needed. 
    • Crush some cars. Prices are down, but they are going to be down for a long time. Take the loss now and put the money in the bank.
  2. Verify / Setup a line of credit
    • Call your banker and be sure that they have everything updated on your line of credit so that you can use it, if needed.
    • Share your plans with your banker.
    • Ask them for advice.
  3. Openly communicate with your employees.
    • Be honest and open. Tell the truth. You are scared, but you care about each of them. 
    • Continue communicating, even if a lock-down occurs.
    • Update your phone to have all of their personal cell numbers so you can text them.
    • Give them your cell number.
  4. Take care of your employees
    • Care is more than money. Talk to them. Feed them. Help them gather supplies.
    • You are the leader - lead with authority. 
  5. Ask your CPA for advice on this one
    • Knowing that two weeks of compensation paid to US employees will be returned to you as a tax credit, think twice before paying in estimated taxes in April. You could use that money to help cover the expenses like payroll. Ask your CPA for advice. 
    • When filing your 2019 taxes, ask for a refund of any over-paid taxes from 2019 

How much money are you going to need? At a bare minimum, you will need two-weeks of payroll. My guess is that you will actually need four-weeks of payroll in the bank. Do you have enough in the bank today to cover four weeks of payroll? Keep in mind that no money will be coming in once everyone is forced into home confinement.

I will be praying for each of you during this time - praying for you to have wisdom to lead your people and to stay well.

Chad Counselman
Chad@WiseCounselGroup.com

Location: Melbourne VIC, Australia

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