Coronavirus: Financial Triage for Small Business - Part 1

Liquidity vs Solvency

If you are a small business, its easy to lose hope in such difficult times.  No doubt there will be many business casualties to go along with the many personal losses; but, for most businesses, I believe it’s much too early to give up.  What we have right now is a liquidity crisis. This pandemic is estimated to take over one trillion dollars out of circulation.  How much money will return to the world economies after it’s over is anyone’s guess.  If you can weather the storm until the virus passes, you have a chance.  It all boils down to careful, creative and courageous management of your cashflow, both inflows and outflows.   Sure, you can apply for more loans and figure out creative ways to earn more money; but, the most immediate positive impact may come from learning how to stretch whatever cashflow you still have much further.


A Dollar Saved is a Dollar Earned

Some of the greatest opportunities to improve your cash flow may come from your existing landlord and lender who might be willing to offer you some relief, if you handle it right.  Don’t wait until you already missed a payment.  Try to approach them while you are still current.  Try to re-negotiate with them to reach an agreement to allow you to make reduced payments for a few months and give you an extended time schedule to pay.  Be prepared to back up your request with current P&Ls and a reasonable cash flow forecast.  If you are lucky enough to rent space in a Publix owned shopping center, your landlord might have already approached you and offered relief.  The Publix package includes the waiving of rent for two months, plus the elimination of payments for common area maintenance fees and taxes. You might have also heard about new executive orders and proposed legislation to suspend foreclosures and evictions.   These only apply to residential homeowners and tenants.with government backed mortgages and government backed properties.


God Helps Those Who Help Themselves

The phrase "God helps those who help themselves," is often thought to be a verse from the bible, but its not. The phrase originated in ancient Greece and appears in two of Aesop's Fables.  It's often attributed to Benjamin Franklin. The expression is still famous around the globe and is used to inspire people for self-help.  So, whether you are religious or not, take the advise from Aesop and Benjamin Franklin, Make the calls.  In Parts 2, Part 3, Part 4 and Part 5, I will provide detailed advice how to approach landlords and creditors, what to expect and how to increase your chances on reaching an agreement to get some relief.   Good Luck!!

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