While there are many different local, state and federal programs in place or being set up for financial relief due to the effects of the coronavirus, Stratus would like to encourage business owners not to wait for the government to begin building your relief plan. By doing some independent prep work now, you will be able to take advantage of opportunities now and when the economy begins its recovery.
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- Create a 6 Month Cash Flow Projection: If you have not done so already, update your cash flow projections for the next 6 months given your new normal for revenue. Then document all your fixed and variable expenses. This analysis will help you understand your monthly cash burn, where you can potentially reduce variable expenses and when you may run into a cash crunch. Being honest about where you are today and how your business may contract in the coming months allows you to access cash resources well before you may need them.
- Call your bank today and discuss terms of your LOC’s: For many of us, we have a line-of-credit (LOC) with a bank for large purchases and for business expansion opportunities. However, at this point, your LOC is one of your best sources of immediate cash. We suggest calling your banker today to discuss terms and amounts. You ultimately may not need the cash but making sure your banker knows you are interested can be useful if lending tightens in the future.
- Call your landlord after you call your bank: If you rent property, read through your rental contract and then call your landlord. You may be able to work out an adjusted payment plan that helps to ease your cash outflow. If, on the other hand, you own the property where you operate, think about reducing the payment to yourself (if you make one) and put off upgrades to your facility. Adjusting or reducing your cash outflow each month can help you keep someone on payroll or pay a driver for an extra delivery.
- Create a “Brain Trust” with other local businesses: While the pressures are different depending on your industry, all businesses are grappling with the dilemma of how to continue operating during a health crisis that is causing an economic slowdown. In this uncertain environment, reach out to local business owners and set up a weekly 30-minute call to share frustrations, concerns, fears and best practices. It can be therapeutic to share your frustrations and fears and enlightening to hear what your colleagues are doing to combat the drag on their business caused by the coronavirus.
- Document Your Business Interruption Claims: Although insurance companies typically deny business interruption claims for pandemics, there is a lot of uncertainty around how the coronavirus will be treated and whether state and local governments will step in to provide business interruption coverage. Therefore, it is prudent to begin documenting your business interruption claims and what you are doing to mitigate these interruptions. To help you with this task, please refer to these tips posted on Stratus’ website.
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Going forward, Stratus would like to offer any small business owner the following tools:
- Free 30-minute phone consultation about any topics that are on your mind; and
- Free operational assessment survey through our website – https://stratuswealthadvisors.com/stratus-valuation-assessment. The assessment takes about 10-15 minutes, a small investment of your time that could yield significant benefits.
We wish the best for each of you and hope you, your family, your employees and your community remain safe and healthy as we all come together to create a stronger future.
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