Survive, Revive & Thrive
Dealing with another pandemic shutdown
Editor’s note: This is the last in a series of stories addressing the steps businesses can take when disaster strikes and how to prepare for potential disaster.
What if disaster struck 3:10 p.m. today? Is your business prepared?
Some businesses would argue that they are dealing with a disaster right now. They are still struggling with the COVID-19 pandemic. But if they had known 90 days ahead that the pandemic would strike, would they have done anything differently?
The Arizona Western College Small Business Development Center encourages companies to use the lessons learned from the pandemic to prepare for the future, should another shutdown occur or any other disaster strike.
Now is the time to plan and prepare for potential disasters, according to the SBDC. The center held a question-and-answer webinar titled “Business Survival During Disasters,” which focused on several scenarios and what businesses can do to address them.
In the webinar, SBDC Director Randy Nelson and his staff explained how businesses can handle various scenarios and prepare ahead of time.
The roughly 50-minute webinar is available on YouTube. It features Nelson; Casandra Martinez, business analyst and procurement specialist; and Vanessa Castillo, senior business analyst; with Robert Theobald, small business ombudsman with the Arizona Commerce Authority, as moderator.
This story addresses a portion of the questions and answers given by the SBDC team.
What if the government for health reasons or other reasons decides to shut down your business or industry for an extended period?
Theobald pointed out that this question hits home right now. “Nine months ago the answer would have been different,” he noted.
“That does hit home, doesn’t it? This goes a little
bit beyond standing in line to buy toilet paper with everyone else,” Nelson quipped.
He explained that the first thing a business should do is communicate with staff. If they can’t work, they won’t get a paycheck and they need to apply for unemployment benefits. For this reason, it’s important to have a contact list of employees.
Employees should also be encouraged to keep up with the news so they know when they’re allowed to go back to work.
In addition, business owners and managers should look at what the company has on hand. Following the initial shutdown, restaurants and bars were stocked for a normal week. Some of them, instead of letting the perishable goods spoil, donated it to food banks.
“Give it a good use. Give it back to the community,” Nelson said.
However, he added, some businesses might still be able to function by innovating. For example, in Yuma, restaurants closed for dining in, but they opened their drive-thru and/or offered delivery or takeout service. Another great innovation in Yuma were restaurants who offered family packs for takeout.
“It literally kept them in business,” Nelson said.
A shutdown is also a good time to do deep cleaning and upgrading inside the business to make it run more efficiently in the future.
“We always put off things day to day because we just don’t have time or we don’t want to spend the money right down. You’re already shut down so it’s the perfect time to do all that,” Nelson said.
Thinking ahead, if this were to happen again, businesses should think of how they can innovate to increase efficiency, perhaps by evaluating positions and using technology to reengineer them.
They should also keep in contact with government agencies, such as the Arizona Commerce Authority, and legislative
representatives. They’re the ones making the rules, the ones who come up with the stimulus packages and “change their mind all the time,” Nelson said.
“Somebody is listening and monitoring and preparing responses,” he added.
Let them know how the rules are affecting businesses. Not all have experience with business ownership and they need to hear first-hand experi
ences.
One of the most important things to do should this happen again is to build capital reserves. Every business should have a safety net of three to six months worth of operating expenses.
“It’s just common sense. If no one comes into your business for six months, you still want to be paying your bills on time,” Nelson said.
What if your largest
customer fires you or stops using your services?
Castillo noted that the first thing is to find out the core problem. Communicate with the customer and ask what happened and if the matter can be corrected.
“If there was a problem, own up to it and then correct it,” Castillo said.
Use the rejection to improve the business. And keep in mind that they rejected the service or product, not the business owner personally. “That can be discouraging for the owner or the manager of the company,” she noted, adding “Pay equal attention to the praise, not just the negative.”
This situation is likely to happen at some point because so many products and services are similar. “As easy as it is to lose a customer, as easy it is to gain another customer,” she said.
Continue to market the business or service and don’t put all the money into one customer. Diversity the customer profile.
Another possibility is to ask for a referral. If a company has a happy customer, they shouldn’t be afraid to ask for a referral because usually those individuals share the same circle of friends within the same industry.
What if a bank or a lender calls your note?
This does happen, according to Martinez. The first thing to do is call the bank to find out why it’s calling the note and see if they could potentially change their mind or negotiate an extension so it’s not immediately due.
Then review the company’s financials to determine how repaying the note immediately is going to impact the cash flow and the business’ ability to
continue forward.
If it has to be paid now, turn to friends and family and anyone who is willing to help a business owner.
In preparation for the future, consider an alternative lending institution, like a community-based lender that works under the federal community loan fund program or an angel investor. Look at starting a Go Fund Me or potentially another company that is willing to use your invoices and accounts receivables to finance the company based on the money owed to you.
Also, review company assets to determine if there’s anything that can be sold off to satisfy the note, like real estate or large machinery, and hold an auction to raise the capital.
Businesses in Yuma and La Paz counties can reach out to the SBDC if they find themselves in sticky situations. The center offers free counseling and can help create a plan to survive that period and come out on the other side alive and strong.
The confidential consulting is designed to help businesses to “survive, revive and thrive” in the future, Nelson noted.
For help in developing a plan, call the SBDC at 928317-6151.