It is now more than two months that coronavirus epidemic started shutting down companies and businesses worldwide. If you were one of these business owners you surely had to think about how you could survive this and avoid bankruptcy amid the coronavirus outbreak. Andrew Karas just did the same.
His company, Asbury Park Distilling, is a New Jersey-based firm, which manufactures spirits and delivers them to restaurants, bars and liquor stores.
“It’s tough. Almost all of the sector we represent has been closed down, “said Karas, who is the founder and co-owner of the distillery that hired eight people until the coronavirus epidemic started.
“We are striving to maintain working as long as we can continue to make our goods in the expectation that the market can finally start up again.”
Distribution revenues dropped by about 50 percent, due to restaurant and bar closures, and the wine bar has seen revenue dropped by about 75 percent, he added.
The company was able to stay open because of liquor stores sales as well as the pick-up of its spirits, including bourbon, gin and vodka, from its tasting room. The firm has soon turned to manufacturing hand sanitizers and offering them to corporations — but free of charge to first responders across the world.
Although Karas was able to remain in service, some were not so fortunate.
“it has become the biggest challenging moment for small companies I’ve seen,” said Karen Mills, a senior fellow at Harvard Business School and former managing director of the Small Business Administration under President Barack Obama.
“It directly affects the cash available to small companies,” she added, indicating that on average these companies have just 27 days of cash buffer.
There are a variety of items smaller companies can do to thrive and avoid bankruptcy amid the coronavirus outbreak.
Take the benefit of the government’s initiatives
Companies with fewer than 500 staff may ask for a loan via the Paycheck Protection Program established under the Coronavirus Aid, Relief and Economic Security Act.
Karas called his bank to begin the process of applying for a loan. He says it will “help us going a little longer.”
The PPP already has authorised 860,000 requests for $210 billion in loans. Lenders can request for forgiveness for any money used for wages costs, mortgage, tax, rent and utilities for an eight-week period.
“Everyone must do this,” said Bob Prosen, CEO of the Prosen Center for Business Advancement.
If you’re not lucky at one branch, try another one, he indicated.
“Most banks won’t allow it if you’re not even a member in business banking, but some will,” he said. “If you’re told no, look around.”
One other alternative is to apply for an Economic Injury Disaster Loan via the SBA. The Department has a list of relief services on its website.
Also, confirm with your city and state to see what loans and subsidies are provided locally. These are all crucial to avoid bankruptcy amid the coronavirus outbreak.
Try and negotiate contracts
Have a look at the accounts you paid for. Collect all of the vendor contracts, organize them, and then begin negotiations stuff like lowered fees or prolonged terms, Prosen said.
Some may not approve, but others might do.
“Your vendors sure don’t want you to get out of business,” he added.
You also can negotiate with the landlord to seek to forgo rent fees for a set period of time.
Collect all outstanding cash
On the other hand, reach out to those who owe you the money and collect it. If you have an invoice before the job was done, don’t; rather than that, charge for the section that was finished.
You may also ask clients for a prepayment of a potential project, said Mills of Harvard Business School.
“The entire idea is to remain solvent so that you can provide a deal on next year’s activity because customers pay up front,” she said.
Reduce the costs of staff
As hard as it is, you need to reduce your employees as much as possible, either by cuts or furloughs, Prosen said.
Only ensure you treat it very carefully. That’s what Karas has to do with it. He laid back a part-time waitress and a full-time bartender.
For those who stay in the job, make “important” salary cuts around the board, Prosen said. This is one ofe the most important ways to avoid bankruptcy amid the coronavirus outbreak.
Increase your productivity.
Do as much research as you can with the least number of people.
For now, you’ll be better off spending more hours with a smaller group than spending shorter hours with a bigger group, Prosen said. You should also increase productivity when operating online.
Before the coronavirus outbreak, several businesses had not made moves since they did not really believe it, Prosen said. In the traditional system, people in the office can speak to one another and know what people are really doing. Companies have now been pushed to switch to new outlets, but they have helped keep productivity up.
Signature is necessary
Be certain that you change all of your signature permits, no matter how high, so that only the owner may authorize any spending, Prosen said.
Nothing you don’t care about should be paid this way.
Look just beyond the pandemic
Mind to manage the clients well through this period, and they’ll stay around until things improve.
“You’re going to provide exceptional service to those current clients. Better than you’ve ever offered before, “Prosen said.
Share information about the condition of the company and provide useful tips. You may also call for feedback from certain customers.
Karas endorsed this concept by offering a free 2-oz bottle of hand sanitizer together with the buying of spirits from the distiller. This company has also took to social media to get the word out that they’re still available and that they’re selling their goods for curbside pickup.
The bottom line
The great news is that, at a certain point, company is going to resume, Mills said. It’s just unknown when this is going to happen.
“The most important thing is to be certain that you really can cut prices, minimize capital outflows, deal with all of your customers and investors, to see how you can run a viable company, and if we don’t have our small companies, our economy will be even tougher to revive,” she said.