Bankruptcy may be one of the last things on your mind when you are creating…
Small businesses are struggling economically because of the COVID-19 pandemic. Many businesses have closed as a result of shelter-in-place orders. Companies that have remained open are dealing with the fallout stemming from the public’s fear of the spread of the disease or supply chain interruptions. Many industries are suffering from curtailed discretionary spending and decreased consumer confidence. Employees have also been affected, with businesses forced into schedule reductions, pay cuts and layoffs due to virus-related slowdowns, as well as mandatory or voluntary closures.
Small businesses can take steps to enable them to remain viable even if the coronavirus continues to spread throughout the U.S.:
- Businesses that have remained open should consider allowing their employees to work at home whenever possible, and when it is not possible, situating workspaces to allow more distance between them and implementing other safety precautions, such as coaching employees about hand washing, frequently cleaning hard surfaces, and other measures aimed at preventing the spread of illness.
- Small businesses should try to cultivate alternate supply chains, especially if they have been using suppliers from areas more widely impacted by the virus.
- Taking steps to lower their overhead costs and protect their cash flow may help small businesses withstand COVID-19-related reductions in sales and customers until the danger passes.
- Small businesses may be able to file claims under insurance policies covering business interruptions or closures if they suffer COVID-19-related losses, depending upon the language of the policy. If small businesses do not yet have this type of coverage, now is a good time to consider obtaining it in case another crisis occurs in the future.
- Even in a crisis situation, there can be positives. For instance, there may be more opportunities for small businesses to access funds at lower rates, which may be important if loans are needed to help them stay open until the impact of COVID-19 decreases. In addition, while larger businesses more dependent on global trade may experience significant disruption, small businesses less sensitive to international economics may be able to continue offering products and services even during the crisis. Out of necessity, many business owners are learning to utilize technology more efficiently which may create opportunities to be more flexible with customers and employees long-term.
The threats represented by COVID-19 will eventually lessen, so the goal for small businesses should be to remain proactive and operate as leanly as possible until things return to normalcy. In the meantime, Littleton Legal can assist business clients by helping them renegotiate payment terms with suppliers and lenders, or seek extensions from landlords if they are having difficulty paying their rent on time. Let us know if we can help you.