In March, the President predicted a strong and quick economic recovery from the COVID-19 crisis. Unfortunately – and at no surprise to most small business owners – the economic decline continues with no real end in sight.
Most patients diagnosed with COVID-19 will make a full recovery within a few weeks. In contrast, small businesses don’t know when or if they will ever recover from this unprecedented national crisis. What they do know is that they will not come out unscathed. There are no cures or easy fixes for the financial strain that business owners are experiencing. Although the federal government has put programs into place to help struggling small business owners, for some, the economic injuries are already too deep. For others, the programs are a stop-gap that will help them stay open only to face an uncertain future.
For the foreseeable future, many small business owners will suffer through sleepless nights trying to decide if they should continue fighting to keep their business alive or if they should become another victim to the coronavirus. Before you decide which path you should follow, there are many factors you should consider.
Do You Have the Desire to Continue?
There is nothing more important to a small business than its owner. You are the conduit from which your business flows. Your vision and motivation are what drives your business. You need to do some soul-searching and ask yourself: Do I still have the desire to continue?
Admitting you are done can be hard, but if you no longer have the vision and motivation that you once did for your small business, it is time to move on. Without these essential building blocks of a business, the chances of your business weathering this storm and succeeding are slim. Now more than ever, business owners must muster everything they have to continue.
How Viable is your Business?
If you decide you still have the vision and motivation to continue your business, there are more questions to consider. As lockdowns end or wax and wane and America’s small businesses navigate the new normal, business owners will need to reevaluate their entire model. Does the post-pandemic market need or want the goods or services that you are selling?
If there is a demand for your product, how long will it take to get your business to take off again? When will you see profit-margins at their pre-pandemic levels? Do you have the financial resources to survive until it takes off again? What will your volume of business be in both the short-term and the long-term?
Survival Means Reorganization
Small business owners and non-business owners alike have been forced to change and reconsider their ways. People are working from home, avoiding large crowds and events, as well as donning masks in public. For small business owners to stay afloat, change is crucial.
Instead of being overwhelmed by all of the changes and disruptions, embrace them. Start to consider what changes you can make to meet your business goals, even in the face of this pandemic. Possible changes that might be necessary include:
- Fewer owners
- Fewer employees
- Shifting to all online business without a brick and mortar storefront
- Narrowing your market
- Expanding your market
- Partnering with other small businesses
There are many different scenarios to think about. Talking with other small business owners in your area or in your market might help you come up with additional ideas that can potentially bring your business success even in light of COVID-19. When it comes to small business, and in a post-COVID-19 landscape, the old proverb is true: necessity is the mother of invention.
Will New Debts Lead to Your Demise?
A large part of the government’s recovery and restart plans involve business loans, such as the Paycheck Protection Program (PPP) or the Economic Injury Disaster Loan (EIDL). Although some lifelines are better than no lifelines, it is yet to be determined if these loans are genuinely what small business need. The rules and regulations surrounding these loans, including when and if they will need to be paid, are not only blurry and ambiguous but are also subject to change.
Before assuming more debt to stay afloat, you need to evaluate whether your business is in the position to handle additional debts. Were you paying down your debts prior to the economic crisis? What do your current debts look like? Can you continue to pay your current debts and afford more debt?
You may need to seriously consider taking on more debt as a short-term solution so that you can keep paying your bills until you have more of a long-term strategy to keep your business financially stable.
Alternative Ways of Coping
There may be more options for your business than remaining open fully or closing permanently. If you have multiple locations, you could close all of them but the most lucrative, for example. In some cases, you may consider filing for bankruptcy in order to keep operating while reorganizing your debts and protecting yourself from creditors. For some small business owners, it might be time to go in a completely new direction. If you have been waiting to change industries, return to a salaried job, return to school, or maybe try another adventure, perhaps now is the time to do so.
Meet with an Experienced California Bankruptcy Attorney
The decisions you make today will likely impact your business for years to come. There are no one-size-fits-all solutions when it comes to finding your light at the end of the tunnel that is the coronavirus pandemic. As a business owner, it may be in your best interest to pursue Chapter 7 or Chapter 13 bankruptcy in order to eliminate or reorganize your debts.
If you are considering bankruptcy or merely want to discuss your options, call us today or contact us online to schedule a consultation with a California bankruptcy lawyer.