May 18, 2020
Positive cash flow is essential. It lets you cover your rent or mortgage, pay your employees, buy parts and supplies, do the necessary marketing, and provide the technology that keeps it all running smoothly. The COVID-19 crisis has brought the economy to a standstill, throwing millions out of work and isolating them at home.
How can your shop survive with its income significantly reduced? Let’s identify some strategies to reduce your overall costs.
Step 1: Negotiate with landlords/mortgage holders and vendors
One of your largest monthly outlays is your rent or mortgage payment. Contact your landlord or mortgage holder now. If you are unable to make payments, be very clear about this. Explain that you need more flexible arrangements, which may require waived or greatly reduced payments now, with the difference to be made up over an extended period of time once the crisis has passed. Stay in regular touch, providing updates on your situation over time.
The same goes for parts and services vendors. Work out a deferred payment plan. If they won’t budge, try some of the ideas in Step 2 (see below).
Step 2: Cut your operating costs
The next step is to reduce the amount of dollars that flow out of your business account. They include:
Step 3: Take advantage of business assistance programs
Recent COVID-19-related Federal legislation has created the Paycheck Protection Program (PPP), which will cover your payroll, rent, mortgage and utility expenses if you keep all of your employees during the crisis. You can find more PPP info here and download the PPP application here.
Many states also have specific grant and loan programs that can help. Apply now for any of these that your shop qualifies for. Ask your accountant and/or banker for assistance and any necessary documentation.
Step 4: Boost your staff’s morale and provide support during a difficult time
It is not easy to lay off staff members or cut their hours, but there are some ways to lessen the sting: