3 Expert Strategies for Curbing Coronavirus-Related Business Losses

Business experts offer their best tips for businesses who are struggling during the COVID-19 pandemic.

By: Erik J. Martin, Contributor

The worldwide coronavirus outbreak threatens to disrupt operations for companies large and small for the foreseeable future. In fact, 82% of business leaders recently surveyed by the Young President’s Organization anticipate revenue declines over the next six months. To help stem losses, 95% of chief executives polled are taking action, including canceling major events (64%), nixing business travel (53%), cutting costs (39%), and allowing employees to telecommute (28%).

There’s much you can’t control during uncertain times like these, but you can take steps to protect your enterprise from being financially crippled by COVID-19. While we recognize that there is no one-size-fits-all solution, following are three expert-recommended strategies to consider in helping your business survive the pandemic.

“Create a 13-week cash flow forecast, which should be stress-tested to explore likely scenarios, including worst-case scenarios.” James Cassel, co-founder and chairman, Cassel Salpeter & Co.

Forecast cash flow and boost liquidity

James Cassel, co-founder and chairman of investment banking firm Cassel Salpeter & Co., said your company’s survival depends on addressing financial/liquidity issues during this crisis.

“Create a 13-week cash flow forecast, which should be stress-tested to explore likely scenarios, including worst-case scenarios,” he said. “Here, you must consider your cash needs looking ahead after thoroughly reviewing fixed and variable expenses.”

Concurrently, seize every opportunity to maximize cash inflow by offering cash reductions to customers and clients who pay more quickly.

“You also want to make what you have last longer. To help, reschedule where you can toward a longer payment period for outstanding expenses. And head to the negotiation table with your vendors, keeping in mind that many of them are facing the same issues you are,” added Cassel.

Lastly, amplify liquidity via extended credit, a second mortgage or a business loan. Small business owners impacted by COVID-19 in many states are now eligible to apply for a U.S. Small Business Administration (SBA) low-interest loan.

Coronavirus Guide for Small Businesses

CO— is working to bring you the best resources and information to help you navigate this challenging time. Read on for our complete coronavirus coverage. Coronavirus Small Business Guide

Log your liabilities

Risk management consultant Frank Russo, founder/principal of Procor Solutions, preaches the significance of proper documentation in the weeks and months ahead.

“As costs begin to pile up and losses are evaluated, small businesses must act now to document all impacts and losses related to the coronavirus in a clear and comprehensible manner,” he says.

Effective record-keeping can, for example, improve your chances of getting reimbursed punctually for business insurance claims and receiving assistance from the federal government or your local small business administration.

Russo specifically advises two key steps. First, establish a separate account number or charge code in your cost accounting system under which all COVID-19-associated costs/losses will be captured; this will be the tracking mechanism used to evaluate all such costs across your business. Second, calculate your company’s operating “baseline”—which means conducting a two- to three-year review to compare your business’ performance before and during the pandemic.

“Sound financial supporting documentation and memorializing and updating the story of your interruption is key,” said Russo. For help with these tasks and expert guidance, “it’s also important to reach out to experts who deal with business interruption events, including attorneys, insurance brokers, risk management professionals and CPAs.”


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In the grip of COVID-19: Survival tips for your business

By James Cassel

Shrouded in uncertainty and panic, COVID-19 is an ominous “gray rhino event” which, while not unanticipated, was ignored, and has significant social and economic impacts. With industries in crisis, markets plunging, and doomsayers predicting an economic catastrophe of apocalyptic proportions, what can a middle-market business do to survive?

Start by putting developments into perspective: We’ve survived other difficult situations and although we will not emerge unscathed, and it’s hard to estimate how long the turmoil will last, this too shall pass. Gather your key advisors and begin assessing the situation. Strategic planning, and developing solutions before matters get worse, is essential to weathering this challenge.

Get moving now. It’s not too late, but time is not your friend.

Take a look at your financial situation, including your liquidity, cash availability, and accounts receivable. Stress test your financial model. Prepare a 13-week cash flow, forecasting anticipated cash income, your needs going forward and reviewing fixed and variable expenses, while looking at ways to bring in cash and stretch it out. For example, if you pay outstanding invoices within 10 days, you may want to pay after 30 or 45 days.

Consider extending discounts to customers who pay more quickly and negotiate better terms with vendors. Look at ways that you can access capital, such as expanding your existing credit, taking out a new business loan, or even a second mortgage on your house. The White House announced a new emergency SBA government loan program—see if you qualify as information becomes available.

If you have a loan with a commercial bank, talk to them about ways they might be able to help, like allowing a temporary moratorium on your principle, paying interest only, and possibly extending you additional credit. If you have one, reach out to your financial sponsor for monetary assistance, or to shareholders who also have an interest in seeing your business pull through.

Try to hold on to good customers who may also be having temporary liquidity issues. Give them better terms for payment or allow them to defer orders if possible. Together, develop creative solutions to help them overcome the challenges. This will not only ensure you keep valuable customers, but it will forge loyalty to you and your company.

Reduce overhead costs. It may be a matter of survival. You may have to furlough some workers, or initiate layoffs. Factor into the equation severance pay to determine whether laying off staff is really cost effective. You can also ask your higher paid employees to take a temporary reduction in compensation. To avoid issues, seek the advice of an employment attorney and an HR consultant.

Communicate with your employees. Be straightforward, yet positive and focused on solutions. If they get sick, consider helping them with medical deductibles, and require them to stay home. This will encourage them to seek treatment and also help avoid decimating your workforce through contagion.

As schools close, if your employees are continuing to work at your premises, arrange for on-site daycare. Efficiency may suffer, but at least team members with children will show up and keep your company going.

If employees start working from home, do you have the laptops and technology your staff will need? If so, test them to ensure they’re in good operating condition, and that your team is properly trained on them.

Keep close tabs on the measures policymakers may be putting into place to help businesses. These can range from reimbursing workers who need to take sick leave to potential tax cuts and credits.

If things deteriorate for your business, reach out to attorneys, a restructuring professional, and an investment banker who works with distressed companies for assistance.

Things will probably get worse before they get better, but we are a resilient nation and we’ll come out of this stronger. To stay afloat, prepare for the worst. And who knows, if a vaccine is developed in the next 12 months or so, that dreaded gray rhino could soon be turning tail.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle- market companies. He may be reached via email at jcassel@casselsalpeter.com or via LinkedIn at https://www.linkedin.com/in/jamesscassel.

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Coronavirus squeezes South Florida businesses

By David Lyons And Ron Hurtibise
Mar 17, 2020

The plea to Washington couldn’t have been more direct: Silver Airways, the Fort Lauderdale-based regional airline that serves Florida and the Caribbean, needs financial aid to survive.

In a statement, CEO Steve Rossum asked local, state and federal governments Monday “to provide critical and immediate financial aid required in order for the airline to survive the most direct crisis the industry has ever faced.”

The company, which employs 1,000 people and maintains a significant presence at Fort Lauderdale-Hollywood International Airport, did not say whether it is about to furlough people or eliminate jobs. But the implication was clear: Time is of the essence or drastic measures may be next.

“We are in dire need of any assistance you can provide that will allow us to continue flying and providing the safe, reliable air transportation that is critical to the Southeastern U.S., Bahamas and the Caribbean,” Rossum said in a letter addressed to several high ranking officials including the secretaries of Treasury and Transportation, and members of Florida’s congressional delegation. “We hope and trust you can be in a position to support this need.

The plea was probably among the most profound from a transportation industry that says it is unable to cope with the effects of the fast-moving coronavirus. As Silver publicized its letter, pilots unions were cutting modified labor deals with American Airlines and Delta Air Lines after both announced severe service cutbacks.

The moves are symptomatic of the cracks that are appearing elsewhere in South Florida’s consumer service-heavy economy, where billions of dollars change hands annually among tourists, full- and part-time residents, business operators and investors.

Companies seeking help

Within the last week, companies large and small have resorted to self-help, meaning some have laid off employees, temporarily suspended service or borrowed more money. But many seemed to be stopping short of sizable layoffs to preserve their businesses. On Monday, Florida reported record low unemployment for January at 2.8 percent, a reminder that the labor supply in many industries such as lodging, construction and technology remains tight. As much as owners want to save money, many want to retain top talent.

Still, dark clouds continued to gather over South Florida’s most important industries Monday as Silver released its call for help and Carnival Corp. announced it expects to lose money this year and intends to borrow $3 billion over the next six months to meet general spending needs. The move came after Royal Caribbean said last week it would cut several hundred contract employees and borrow another $550 million.

Lesser known businesses are following similar strategies, though the companies with access to millions to borrow are few and far between. Among small businesses, the defensive measures are not confined to bars, restaurants and entertainment venues.

Basic Fun, a toy maker based in Boca Raton, recently laid off 18 people, or 10 percent of its work force, due to reduced demand and disruption of supplies from China, where the coronavirus exploded, said its CEO, Jay Foreman.

“We’re going to need support for small and medium-sized businesses by the government,” Foreman told CNBC. “They’re going to have to backstop the banks so the banks can backstop small business.”

Warby Parker, the national eyeglass retailer, temporarily shut the doors of all of its stores around the country through March 27, including those on Las Olas Boulevard in Fort Lauderdale and at the Boca Town Center.

“COVID-19 is impacting all of us — as individuals and as communities — in unprecedented ways,” the company said on its website. “Given the rapidly changing environment, we have decided to temporarily close all of our stores… for the safety of our customers, our employees, and the general public.”

Management said its retail employees will still be paid “as if they were working in stores during this time.”

Long-term damage

Not everyone was hedging their payroll bets. Humana said it is looking for 100 new workers to staff a call center in Miramar.

But South Florida financial experts who help companies fix their financial problems are doubtful the adverse economic impact of the virus will be short- lived.

Bankruptcy lawyer Paul Singerman of Berger Singerman worries about the staying power of vendors and other companies that support the hospitality, cruise line and aviation industries.

“These are going to be the front line of casualties,” he said. “As you know, it’s small business that employs the majority of employees in this country.”

He recalled the financial damage suffered by raw material suppliers and skilled workers in the construction industry after the housing collapse of 2007. “The ripple effect in the cruise, hospitality and aviation are bigger and that concerns me,” Singerman said.

Investment banker James Cassel of the Miami firm Cassel Salpeter sees the potential for a spike in jobless rates if the virus problem is prolonged.

“This is not going to be something that is over within two weeks, this is going to go on,” he said. “We’re going to see a huge increase in unemployment.”

And those unemployed workers are going to need financial help. Federal and state lawmakers, along with community-level nonprofits, are working on assistance packages meant to keep businesses and their employees afloat through the crisis.

Federal assistance

Help for employees who experience layoffs or severe pay cuts passed the U.S. House over the weekend but must still be approved by the Senate, which is under pressure to pass it as soon as possible. It’s part of a comprehensive package of economic stimulus measures projected to be worth as much as$800 billion.

As House and Senate leaders began negotiations Monday, disagreements remained over the scope of the assistance and which workers would be eligible.

For example, the House bill provides two weeks’ paid sick leave and up to three months of paid family and medical leave equal to at least two-thirds of their pay. But those benefits would be available only to employees of companies that employ fewer than 500 people, and only if they get sick, quarantined, must care for a family member or are affected by school closings.

Employees of large companies would not be eligible, under the House proposal. One senator, Tom Cotton, R-Arkansas, said on Fox & Friends Monday that the bill “doesn’t go far enough and it doesn’t go fast enough.”

The multibillion-dollar bill would provide $1 billion for food aid, to be distributed through food banks, school lunch programs and the federal Supplemental Nutrition Assistance Program, or SNAP. It would also suspend work and work training requirements for SNAP recipients.

In Florida, Gov. DeSantis has asked all businesses to complete a Business Damage Assessment survey, managed by the Florida Department of Economic Opportunity, to help the state figure out how to most efficiently distribute the coming federal assistance, including economic injury disaster loans to made available through the federal Small Business Administration.

United Way chapters in Broward and Palm Beach counties are soliciting donations through their websites to help residents experiencing hardships because of the coronavirus.

Kathleen Cannon, president and CEO of the United Way of Broward County, said on a conference call of Broward business leaders Monday that the donations will help displaced workers make rent, mortgage and utility payments. “We want to prevent people from falling into poverty,” Cannon said.

Donations can be made at unitedwaybroward.org and unitedwaypbc.org. Miami-Dade County’s United Way chapter plans to roll out its own program soon, the chapter’s executive director said Monday.

While federal relief programs remain under negotiation, workers who have already been laid off or had their hours cut are encouraged to begin applying for assistance through existing programs, such as Florida’s unemployment insurance benefits, as most new aid will be distributed through those channels.

Where to find help

Links to information about many types of federal and state benefits are compiled at the site benefits.gov.

Unemployment assistance: Available for workers who lost their jobs  through no fault of their own. In Florida, a maximum of $275 a week is currently available for a maximum of 26 weeks, though the federal assistance package will likely extend that eligibility. All claims must be completed online at floridajobs.org.

Food assistance: The Florida Food Assistance Program administers the Supplemental Nutrition Assistance Program, known as SNAP. To apply, go to myflorida.com/accessflorida and click the link “Apply for Benefits.”

Feeding South Florida, a regional food bank serving about 300 nonprofit agencies, is distributing ready-to-eat food. To determine eligibility for food and other benefits, go to feedingsouthflorida.org or call 954-518-1857.

Homelessness prevention assistance, including the Emergency Solutions Grant Program:

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