4Thought Blog

4thought graphic - blog 2020

Actions to Take to Reduce the Coronavirus’s Business Impact

Posted by Concannon Miller on Mon, Mar 16, 2020

Find me on:

Actions to Take to Reduce the Coronavirus’s Business ImpactThe impact of the novel coronavirus on businesses has started and it’s expected to last for weeks, if not months.

Those in the hospitality and entertainment industries are being hardest hit currently with some mandated shutdowns or new capacity rules, but it’s likely to touch just about every industry, considering the effects of supply chain operations, potential expanded shutdowns and rippling effects leading to a likely economic slowdown.

We’re closely monitoring the situation in Washington, D.C. and the states of our business clients, including Pennsylvania and New Jersey.

Business Best Practices

While the effects continue to unravel, here are some best practices your business should consider:

Contact your bank: In addition to the SBA loans, contact your bank to see your options for lines of credit. With interest rates at historic lows, it’s also a good time to consider refinancing.

Conserve cash: Keep a close eye on expenses, including reducing your draws as owners, improving inventory tracking and putting off any unnecessary orders or expenses.

Here are some recommendations from BDO – Concannon Miller is a member of the BDO Alliance:

  • Conduct a thorough risk assessment of business operations, taking a holistic approach across the globe rather than focusing on certain regions, to assess the level of possible interruption and formulate measures to mitigate potential impacts.
  • Perform financial scenario, sensitivity and ratio analysis, examining the overall threat to the organization should sales and/or production decrease at various percentage rates. Determine what actions may need to be taken at certain stages to reduce further losses.
  • Plan for voluntary/involuntary employee absenteeism and reduction in workforce, which will impact production and service levels. Consider alternative work arrangements such as relocation (working from home or other locations), reassignment of workflow (altering shifts), or reallocation of production.
  • Review the pace of expenditure in relation to the company’s expansion plans and existing development projects (if any) and slow down the cash burn rate.
  • Re-prioritize the allocation of resources to unaffected business lines.
  • Assess any impact relative to customer behaviors or sales over the past month(s) to determine if adjustments should be made to the level of staff needed or business hours.
  • Explore and identify business transformation opportunities and models to reduce over-reliance on existing business segments.
  • Identify measures for controlling budgets and increasing cost savings, such as assessing the possibility of outsourcing or reduction of non-critical business activities.
  • Explore opportunities for collaboration with new strategic business partners for new market development and to meet customers’ needs.
  • Identify alternative solutions if forced to suspend operations at the business premises.

BDO’s full Coronavirus Impact and Risk Response Guide can be found here.

Federal Small Business Loans

The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus.

The SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.

These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.

Repayment terms are up to a maximum of 30 years. More information can be found here: https://www.sba.gov/disaster-assistance/coronavirus-covid-19

Sign up for more Timely Tips for Businesses

Topics: Business consulting, COVID-19

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

Subscribe for more Timely Tips for Businesses

Recent Posts