If you’re under a stay-at-home order or sales have dropped off significantly because of our current situation, I’m going to suggest three things that you need to do now for both your business and your family.
Know the Nut to Crack
The nut you need to crack is an old expression that refers to the funds you need each month to survive. Starting with your household, how much do you need to keep a roof over your head and food on the table?
This isn’t the same as your budget. A budget assumes a steady income and includes niceties, like entertainment or travel or private school for the kids. If you aren’t able to sell, build or collect on jobs, forget the niceties. Figure out the necessities; how much do you need to cover food, housing, utilities, and medical expenses?
Now look at your business. How much do you need to bring in every month to keep your doors open? If you don’t have any revenue, or if revenue is drastically reduced, what do you need to keep your business alive until we get past this spell?
Knowing the absolute minimum you need to keep both your business and your family solvent will give you peace of mind. If you don’t have enough coming in to crack that nut, look realistically at your family and business savings so you know how long you can hold on without getting desperate. If you need to do something to bring money in the door, you’ll know how much you need to earn.
Negotiate Your Debt
Do you have any debt? If you have a line of credit, a mortgage, or supplier or credit card debt that you’re not sure you can pay, contact them now. They might be willing to defer payments and even interest for a period of time, but you won’t know unless you ask. It’s better to ask and show that you care about the debt than to skip payments and pretend it doesn’t exist. It won’t go away.
Now, if you owe money to a subcontractor for work they’ve already performed, that’s different. When you owe someone who is down the food chain from you, you’re putting their business and their family at risk. They don’t have the deep pockets a bank or even a supplier might have to get by.
Don’t ignore them or block their calls. Communicate, and beg or borrow whatever you need to pay them. It’s not pretty, but the way you treat them now when everyone is hurting will be remembered when life returns to whatever normal will be.
Someday we’ll talk about payment schedules on contracts, and the importance of setting aside funds for times like this. This isn’t the day. Today, negotiate your debt.
Plan, Revise, Repeat
I’m not talking about year-end planning. I’m talking about things you can do today, this week, next week, maybe even next month. Sit down and list at least five things you can do for your business. Then do what you can.
Every day, evaluate the list and adjust as needed. Cross off what you completed, and set aside what you discovered can’t be done right now. Add items that came to you over the past day, and adjust based on whatever circumstances have changed. This exercise, both the planning and the doing, will help keep you positive, focused and hopeful.
The book Markup & Profit Revisited closes with advice that seems even more pertinent today. ” . . . when something happens, when you get pushed off the wall, bounce – don’t break . . . Focus on the things that you can control, and ignore the things you can’t control. Don’t get hung up on worrying about things that happened in the past or that could happen in the future. Learn from your mistakes and move on.”
Don’t expect everything to go back to normal the day after restrictions are lifted. It’s possible the economy will recover as quickly as it declined, but it’s also possible it will take months. So take this time to know where you stand financially, to do what you can to defer debt, and keep planning. Prepare for the worst and we’re all hoping for the best.
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