Covid-19 Business Survival Outlook

I was reading an article on Bloomberg.com in which the author was making some rather confident predictions about the economy.

I don’t think so.

While most businesses are very much hoping that the current economic situation will soon improve (which seems likely once businesses begin re-opening upon lifting of state-level restrictions), no one knows for sure what is going to happen next week, let alone next month, when it comes to the national economy, Covid-19 infection rates, vaccine development, etc.

If that sounds pessimistic, the intention is the opposite. Because no one has the winning lottery numbers, no one actually knows what is going to happen with our economy. The point being, there is a lot of information being broadcast about what small and medium businesses should be doing during the current crisis. Some is helpful, some is not. However, I encourage anyone running a business to hold a few basic ideas in mind to keep the bigger pictures in perspective.

Be Wary Of Authors And Their Crystal Balls

Try to filter out as much “noise” as possible. Any time you read or hear conclusions about what’s going to happen, your antenna should go up. And I’m not talking about the local broadcaster informing viewers about alternate-side of the street parking for tomorrow. Rather, I’m talking about conclusions like the following sourced from a post on Bloomberg.com: “The U.S. economy post-Covid-19 will look a lot like the one that struggled to recover from the 2008-09 financial crisis - only in some ways worse. Growth will be disappointingly tepid after an initial rebound and, for a time at least, inflation dangerously lower and unemployment heartbreakingly higher than they were back then.”

I hate to pick on the guy, but how does he know what’s going to happen?

Survival Is All But Guaranteed

Above all else, try to keep in mind that the current circumstances are not “the end,” so to speak. If you take a glance in the rearview mirror, there is several thousand years of agricultural, industrial, societal, cultural, and technological progress behind us, albeit with the occasional bump in the road. With that in mind, it is extremely likely that our civilization will continue progressing despite the current pandemic.

That said, you may be sitting there thinking, “Thanks so much! Waxing poetic doesn’t exactly put money in the bank, does it?”

I don’t disagree with you. However, if I started this section with, “Try to remain calm,” we could have chalked that up to me telling you something you already know. Further, has anyone in the history of remaining calm ever remained calm as a result of a lawyer’s suggestion? Probably not.

But if you think about business over the past hundred years or so and, if you think about your professional life overall, some sense of calm may follow because (a) business has made it this far and, more importantly, (b) you have made it this far which means, (c) your business will likely continue to make it despite the pandemic.

Dive Deep

It is often said that the true mark of a champion is not how she performs while at the top of her respective game but how well she performs when the going gets tough. I believe the same can be said of most businesses.

As always, there are exceptions: how does the three-chair barbershop survive when New York State has mandated that the doors close for as long as they have? In that scenario, I’m unsure how much strategic creativity will save the business. Thankfully, the government made available the Paycheck Protection Program safety net to help avoid even deeper economic percussions.

 However, for those businesses that provide products or services, those that can pivot are those most likely to not just survive, but to continue managing some level of cash flow which helps not just the organizations, but the economy overall.

But what does “pivoting” mean? It means examining how the business has been run so far and what changes can be implemented yesterday in the hopes of keeping the business going, even if it means producing a modified product or service to an entirely new target market.

Note, I do not write this as a marketing or business development expert, so I don’t make the above statement as if I’m sitting in a position of authority. Rather, my purpose is to encourage past, current, and future business clients to brainstorm opportunities that may arise from the challenges imposed on all of us due to the pandemic. Other business are doing it. So can you.

Money Is Cheap

A college professor explained interest as rent on money and I think that was accurate. If cash flow is getting down to pretty much the last drop, this may be a good time to borrow some coin. 

Because interest can adversely impact profit, it’s often a knee-jerk reaction to decide against borrowing, even in the face of low interest rates. It’s worthwhile, however, to calculate the amount of interest that the business would likely pay on an amount borrowed. When interests rates are as low as they are now, the actual amount of interest in total dollars may seem a lot more palatable compared to going out of business.

And, again, try to keep bigger pictures in mind. Growth and sustainability for all businesses are almost impossible without capital. Try to avoid allowing interest to cause your business to stick it’s head in the sand hoping for sunnier days.

Creditors Galore

It’s probably a solid guess that the majority of businesses currently lack the cash flow to satisfy all of their bills. With all of New York State having been on pause for sixty days, it’s hard to imagine how many organizations, other than grocery stores and face mask producers, who have had enough steady cash flow to keep current on their liabilities.

In other words, operations that lack the ability to pay bills are the majority rather than the minority, so if your business fits in that category, you are by no means alone no matter what your creditors may tell you.

And speaking of creditors, two things. Any creditor who has the audacity to threaten legal action for past due invoices is pretty much full of it. Courts in New York have been all but closed to all “non-essential” proceedings for two months. Once the Courts re-open, it’s going to take a long time before new proceedings find their way onto any judge’s calendar, especially as it relates to creditors taking action based on breach of contract. And even if a creditor does decide to take that route, it’s hard to imagine judges finding sympathy for creditors demanding their money despite the pandemic.

At the same time, though, I would advise against ignoring creditors completely. Rather, I would encourage every business that it probably makes a lot of sense to simply explain to your creditors that (a) cash flow is non-existent due to (b) the current economic climate of which every creditor is aware, but (c) you plan on paying your bills as soon as you can.

We Are Not All In This Together

You’ve probably heard or seen that kind of language a lot in the past few months. What in the world it’s supposed to mean, I have no idea. If I told you, “We’re all in this together,” you could easily reply, “Isn’t business ‘dog eat dog?’” Or, “Does that mean you’re going to pay my bills?”

See what I’m saying? Of course, friends and colleagues will help as best possible, but I think it was Brian Tracy who said, “The true test of leadership is how you function in a crisis.” Same idea as what champions do when the chips are down, and I think it’s relevant for businesses in New York.

Keep fighting the good fight.