Part 2: So, Now What?

Hello, everyone, and welcome back to the year 2020!  Time travel is fun, yes? Yes? Anyone?  Well, anyhow, it is good to actually see you, in all three of the dimensions to which we were previously accustomed. Have you gained a new perspective? Lost some money? Gained a little weight? Lost your mind?   

Well, we’re back (sort of) and before you get too excited, let’s all understand that while the Year 2020 is in fact resuming, that it will do so in an Alternate Universe.  Some of you are having vague flashbacks to January and February, when you had big plans for the year.  Remember those? The Plans? Poor things, they never had a chance.   

But, we must move onward, so in this second (and long-awaited) segment of “Now What?”, let’s talk about Business in an Alternate Universe.  In the “A.U.”, as we like to call it, our fiscal realities and our business behaviors have changed, whether we like it or not (and mainly, we don’t like it).  None of us know how long we’re going to be in the A.U., so to be prepared, you should consider the following principles:

• Refine Those Forecasts. If you are weary of us talking about the importance of good forecasting, then, uh…too bad.  It is vital, now more than ever.  Way back in Part 1 of this “Now What?” series, we talked about getting even more detailed in your forecasting.  That’s still true, but now it is becoming apparent that the rest of 2020, in the Alternate Universe, we will all continue to feel some impact from COVID fears and from overall social unrest.  You need contingencies built in to your forecast, with fully-fleshed-out scenarios that test your sensitivity to further slowdowns, restrictions, and demands on your accumulated business capital.  By the way, this kind of preparation for the Alternate Universe will have the secondary benefit of making your business stronger and better for a future time, when the normal universe is restored.
• Be Careful with those Government Loans! The vast majority of eligible small businesses, like yours, received a PPP loan and/or an Economic Injury Disaster Loan (EIDL).  Most of you have probably been talking to your trusted advisor about the PPP, its allowable uses, conditions for full forgiveness, etc.  But, please exercise great caution with those funds you received from EIDL or any state/local loans and grants that you may have obtained.  Most come with specific restrictions on use of funds, record-keeping, and asset distributions to owners, so be sure to consult with your advisor before you create any complications or audit issues for yourself.
• Talk to your Banker NOW!  You should always be open and honest with your banker, but this is a great opportunity to re-establish or reinforce great lines of communication.  Spend some time getting your year-to-date books in order (catch up now if you have fallen behind!), call your banker, and initiate the conversation.  Bankers do well for you when they have information; they struggle mightily when they don’t know things, because it makes them look stupid in front of their managers.  Please, make your banker look smart and not stupid.  Talk openly about the challenges you are facing and the financing needs you anticipate, and show your bank those detailed projections.  If every business in the world would do this, the whole system of banking and credit would improve immediately.

We are not going to sugar-coat this.  Unemployment is high.  Losses have accumulated.  People are (obviously) on edge.  Do these things above to get ready for the rough path ahead, and it’s not too late.