Tips to Help Small Businesses Manage During Times of Crisis

Small Business Storefronts

March 31, 2020 - COVID-19 Small Business & Commercial DC, DE, MD, VA Florida New England New Jersey, New York and PA North and South Carolina

TD's Jay DesMarteau, Head of Commercial Distribution, provides insights

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Unprecedented circumstances surrounding COVID-19 are forcing small business owners to quickly adapt to various local, state and federal guidelines around opening hours, social distancing and even closures in many areas. This is not an easy time for any business owner, as no one can predict if the physical closure orders will last a few weeks or months at this point.

Rather than focus on what's out of their control, TD's Head of Commercial Distribution, Jay DesMarteau, shares his insights on strategies small businesses can home in on during times of crisis.

Q: How can small businesses determine the pending financial impact of closures and other operational restrictions?

Small businesses, particularly those without options to operate virtually, should work with their accountant or CFO to calculate what the financial impact might be if their business is totally shutdown or has strict limitations for an extended time. Once this potential revenue loss is determined, the business owner should contact his or her financial institution, if there is currently a loan or line of credit on file, to see what might be done about adjusting payments or fees.

Q: How can small business owners access much-needed additional financing?

Business owners may do the calculation above and determine that they may need a new line of credit or loan during this time to cover operating costs. Before contacting a bank, the business owner should collect and create updated financial statements, tax returns, business license information (if applicable) and more to cut down on any delays in obtaining financing that may be needed to keep the business operational during this time.

Q: What are some methods small businesses can use to improve their revenue cycles?

Another tactic is for businesses to tap into available or potential capital. If possible, small businesses should accelerate their cash collections. Owning a business comes with an endless stream of expenses – employee salaries, suppliers, loan payments – that can pile up or result in account overdrafts. Paying these bills becomes even more complex during lean times when assets, profitability and liquidity fluctuate.

Where possible, try to accelerate the business' revenue cycle using methods such as automated receivables; mobile check deposit (remote deposit capture); positive pay for checks or ACH, which speeds up clearing time by matching payment information to a list of known payers; or a 'smart safe' that electronically counts cash deposits and credits the business account prior to the physical cash reaching the bank. Small businesses should speak with their financial institution to understand how each of these products work and to understand if any fees might be temporarily postponed or waived.

Q: Are there operational best practices small businesses should also keep top of mind?

Businesses should consider cutting inventory orders and working with suppliers to negotiate payment extensions where possible for accounts payable. Doing this proactively will help ensure that both parties can agree on temporary payment terms so late payments will not be reported and ding personal and/or business credit scores.

Additionally, if they are not already doing so, small business owners should separate business and personal finances. Small business owners who mix personal and business finances within one account may have difficulty getting an accurate view of cash flow and producing income statements needed to obtain financing. Setting up separate accounts pays off at tax time as well.

Q: Do you have any other recommendations?

Small businesses should work together with the community to bolster one another during this time. Talking with other business owners, community organizations and customers may help inspire some ideas on next steps, whether it be offering delivery options, 24/7 customer assistance or implementing online solutions that translate the business' offerings to another platform. This is also an opportunity for small business owners to get to know their employees and thoughtfully brainstorm how to help each other work through issues that may not be top-of-mind for one another


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