After several months’ governments are starting to reopen businesses in phases. As a small business owner this can be an exciting and anxious time. There are three key questions all small business owners are asking:
Can my business weather the storm?
This is an excellent starting point. Given the ‘new norm’ can your current business model survive and thrive? Is your business set up for the future?
When seeking to understand if your business can weather the storm some questions you want to ask are:
- How has the pandemic and social distancing rules impacted your clients and how are they feeling?
- What is their recovery plan and how is this impacting them?
- Are your clients back at work?
- How has your supply chain been impacted?
- Lenders/investors moving forward – how is that looking?
- Do you have the cash injection you want/need?
- What if it’s a longer recovery period?
In order to weather the storm, the answers to these questions will help. If your supply chain is intact, your clients are back to work and you can serve them in a way which is compliant with social distancing rules, you may be able to weather the storm. If not, you may need to pivot your business.
You can get more information about reopening your business in the following websites:
Also, you can find and follow updates on COVID-19 in your local community via social media resources or RSS feeds.
Does My Business Need to Pivot?
If the answer to some or most of the questions above was negative, your business may need to pivot. What does that look like? For Big Rig Brewery in Kanata, ON that meant pivoting from producing beer to producing hand sanitizer. At Bromwich+Smith, it meant implementing our video and smart phone signing services so that we could continue to offer debt relief to Canadians from the safety and comfort of their homes.
In order to pivot, you will need to assess the technology needs, how you can provide equal or more superior service to your clients than with the original model, if you need to change or add the type of services or products you offer and costs associated with the pivot.
A pivot can be temporary, to ride out the storm or it can be permanent to boldly go in a new direction. The key is to look at the foreseeable future and see if you’re business is poised to thrive. Are you really swimming or is the current carrying you? When the economy is good and there are no emergencies we can be carried by the current of good times and good fortune. When the tide rolls in, only the strongest swimmers will make it.
Bring in your stakeholders and leadership for this conversation. Speak to a business strategist and consult your accountant to surround yourself with the support and input you need to pivot your business into a strong position.
What if my Business Cannot Pivot and We Need to Close?
The sad reality is that many small businesses will not survive this storm. The first thing we need here is forgiveness and empathy towards ourselves as business owners. Promises are made on certain predications and when those predications change everything changes. It’s like promising to meet an old friend for lunch, then having to take your child in to a clinic for a minor injury. The promise to meet for lunch must change and your friend will empathize and forgive you. In that same way we need to empathize and forgive ourselves. You are not bad, or a failure and you certainly are not alone.
According to CFIB’s survey July 2020, forty-one percent of Canadian small to medium-sized businesses on Facebook expect cash flow to be a challenge in the next few months. Only sixty-seven percent of Canadian female-led SMBs on Facebook are operational or engaging in any revenue-generating activities, which is less than the 83 percent of male companies that are doing so.
Lenders and creditors are also businesses and they are flexible until they are not. As lenders tighten up and there is less injection of cash or borrowed funds to keep the business afloat, the reality is that not all businesses can remain open. You are not alone, and this is the reality for many small business owners.
As a corporate entity, you are not personally liable for the business debt, except certain things like environmental issues, if you’re a director then source deductions and GST which would all be considered deemed trust and will fall on the shoulders of the director.
Most likely that as a small business, although you went to bank for help with your business, it is extremely likely the loan is in your name as well, so if you’re business restructures, you are personally still responsible.
Look at it as what’s in it for your lenders/creditors, what are they getting out of it, what is your ask and how do we move forward?
The good news is that you can restructure, and you can open another business in the future too. This is not a time to hold out, barely making ends meet and hoping for things to change. This is a time to take action so you can come back stronger.
Small business owners can avoid bankruptcy with a federally legislated consumer proposal. This is an excellent alternative and one to consider before cashing out any investments or selling off assets. A free, personalized and no obligation phone call to a Licensed Insolvency Trustee will provide you with a clear picture of your options and how to get out from under a failing business and spring board on to a brighter, lighter and better future.
If your business cannot weather the storm nor pivot, call Bromwich+Smith's Debt Relief Specialists at 1.855.884.9243 or request a call back on their "contact us" page and start rebuilding your worth. Their team will provide you initial free and confidential consultation.