Decisions to make now: closing, unemployment, reducing expenses & understanding cashflow

With so many of our clients located in Seattle, WA (ground zero for the COVID-19 outbreak in the US) we’re having conversations daily where we are thinking through strategies and next steps.

Here’s what we’re finding most helpful to take action on right away:

Decide on closing / unemployment

We are finding that if a business is mandated to be closed or simply cannot stay open due to nearly zero business, (restaurant, fitness, catering, events, tourism, retail, walk-in services) then it most likely makes sense to:

• Move quickly to temporarily close.

• Encourage employees to file for unemployment. In Washington, employees can go here. Prep employees that there is a backlog of unemployment claims and to be patient.

• If you offer Health Insurance, contact your broker/provider to determine if you can continue covering your unemployed employees for a period of time

If your business doesn’t immediately need to close, move on to the next step.

Review income & expenses and understand your burn rate

Review a monthly profit and loss and look for ways to immediately reduce expenses, by:

• Asking landlords for delayed or reduced rent.

• Asking banks for delayed mortgage and/or loan payments. Many banks are already allowing a few months of delay.

• Trimming the fat by turning-off or turning-down some non-essential services and subscriptions. Schedule a meeting with us ASAP and we’ll help you through this process on a Zoom meeting (no fee).

Understand your monthly burn rate and be prepared for the next few months. Are you closing and if so, is there enough cash to cover expenses while waiting to reopen?  Are you already seeing reduced revenue and can see that you’ll need to incrementally reduce hours and expenses?

Get a plan in place and communicate with your team to keep morale high and anxiety low

Applying for loans and relief

There are a lot of resources rolling out quickly for small businesses and organizations to help them with grants or short-term loans.

We’re big fans of Gusto payroll, and they have a good article here on loans, grants, and relief options. If you want to get right down to it, this Google Spreadsheet shows resources by federal and state. It is really valuable and well organized.

Seattle and the state of Washington have a number of resources in place, such as:

• The City of Seattle has an emergency Small Business Stabilization Fund for small businesses with 5 employees or less. The deadline is March 25th. Act fast!

• Amazon created a $5 million Neighborhood Small Business Relief Fund to provide cash grants to local small businesses impacted by fewer customers due to COVID-19. The fund is intended to support small businesses with fewer than 50 employees or less than $7 million in annual revenue located near Amazon’s Seattle office weather the outbreak.

• The SBA is offering Economic Injury Disaster Loans (EIDL.) I’d highly encourage you to invest two hours and apply for a loan ASAP. The interest rate and terms are going to be very favorable. Even though we have savings to work with here at System Six, we’re applying just in case the funds help us better weather the storm, since we don’t know what the next 6-12 months might look like.