The coronavirus has taken the world by storm and not in a good way. The world has yet to see the full extent of the fallout of what the novel pandemic will yield, but everyone knows there will be a global economic impact. Good business owners remain agile and attempt to find ways to pivot and make the necessary adjustments to sustain them through prolonged periods of drought. Here are three things businesses can do to adjust.
- Become Your Own Insurer
Insurance is a major expense for most organizations. A mature, but re-discovered insurance approach is gaining traction in the captive insurance industry. The approach is similar to risk financing and it basically involves the insurance entity being owned by the insured. Just like a typical business, a captive insurance approach attempts to generate a profit and uses risk analysis in an attempt to do so. Smaller claims are paid by the entity, but larger claims must be covered by an entity with the ability to cover large losses.
- SBA Loans
The $2 Trillion stimulus package that was recently approved has yet to take effect, but there is something in there for many areas of the economy including small businesses. The SBA is encouraged to approve zero percent interest loans to small businesses, which are the lifeblood of the U.S. economy. If cash flow is or becomes an issue for you, an SBA loan may cover the gap and allow you to generate more revenue when the economy gets humming again. This is a good time to also remember that a minimum of three months and a maximum of nine months of cash reserves should be the goal of every small business to cover cash flow in uncertain times such as this.
Many banks and lenders are allowing personal deferments for consumers who are struggling to pay debt payments right now. The same may hold true for businesses, especially small businesses that have personal relationships with their bankers. It is to everyone’s best interest for small businesses to stay afloat and for people to keep their homes. Businesses that are worried about their ability to make payments should call their creditors and see if short-term alternatives can be identified.
This is an uncertain time in the U.S. and globally. It remains to be seen what the full impact of the coronavirus will be. Businesses should be proactive in finding solutions that will keep them afloat and ready to roll when the economy hums to life again.