6 Ways to Prepare Your Business for Uncertain Times

While so many of us believe our Plan A will always work out and wish it to do so, you should always have a Plan B, C, and D.

The entire world continues to rumble from the impact of a global pandemic. Businesses have been hit HARD: from the travel and hospitality industry to pretty much every product or service based business out there. In these frightening and uncertain times, we’ve realized that no one is immune from the ups and, lately, downs of the economy. So, it’s time to talk about it- How can we prepare our businesses from these tough unexpected economic times . As we continue to battle through the physical and financial impact of COVID-19 (coronavirus), I thought I’d share a few ways to help ensure that your business survives turbulence and emerges relatively unscathed from the economic storm.

1. Fortify Your Agreements: As I mentioned in my article on Coronavirus & Contracts, now is the time to strengthen your agreements. Identify and outline your company’s policy on rescheduling, cancellations, failure to perform and of course force majeure. You shouldn’t even wait for something to go wrong before making these changes. A clear contract is a strong contract. Establish how much money you’re keeping and  how much you’ll have to refund if performance is impeded. If scenarios are outlined from the beginning, there’s less conflict in the future and no one will question your motives. Which brings me to my next point...

2. Maintain a Business Account (and consider Escrow): It goes without saying that you should maintain separate accounts for your business finances. For one, it makes business accounting easier and prevents you from double dipping; on another note, it could be the difference maker for keeping business afloat during trying times. As we’ve seen in the last month, Sh*t happens! Funds you were expecting could turn into no-shows and clients you were banking on may choose to cancel. You have to prepare (as much as you can) for refund requests and staff retainers in times of no income. Escrow accounts are a staple for us attorneys but I think it should be something considered around the board, especially with service based businesses that collect retainers/deposits. Keeping these retainers in escrow or holding them in your business account in case of refunds, could help your business out when the unexpected happens. Next up: 

3. Have a Business Continuity Plan: while so many of us believe our Plan A will always work out and wish it to do so, you should always have a Plan B, C, and D. Oftentimes, this is referred to as a business continuity plan which contemplates either economic distress hurting the business, a change in leadership, or other mission-critical changes that require a realignment of the business or its trajectory. Thinking this out early and having it memorialized is a crucial part of ensuring a turn-key operation.This applies for small and large businesses especially if you are an employer. During times of uncertainty, your employees will be looking to you for direction, having an emergency plan in place will calm not just their anxieties but yours as well. Here’s a small business continuity plan by FINRA and one by FEMA. 

4. Get Business Interruption Insurance: when tough economic times force your business to close or dramatically scale back, business interruption insurance is key to helping keep your company afloat. Business interruption insurance will help make the difference when there are truly extraordinary circumstances, such as the current coronavirus pandemic. However, you should carefully read the terms of your existing policy or negotiate your future policy so that the events that impact your business can be factored into your insurance safety net. 

5. Be ready to Evolve your Strategy: no matter the economic climate, consumers will still spend on goods or services they believe to be a good value or market to their needs. Whatever the reason for the disruption in your industry, marketing to consumers’ needs and tastes will ensure your business remains relevant and profitable. For instance, many businesses have leaned into a “contactless” experience during the coronavirus pandemic so consumers continue to rely on their goods and services as constants in an uncertain environment. 

6. Accept Help: Sometimes, regardless of how well we plan, things can become too much for you to bear financially. Thankfully there are a myriad of public (govt) and private business relief programs which are working to help small businesses stay afloat. Some to consider are:

   1. SBA Paycheck Protection Program

   2. SBA Disaster Assistance Loans

   3. Hello Alice

   4. Shea Moisture

   5. Facebook

   6. Sara Blakely’s Red Backpack Fund 

There are quite a few options available (here is a great list of options (also here), so speak with a financial advisor about what’s available, so you can be in the strongest position possible.

The bottom line is this: You have put A LOT into your business and it’s important to prepare for both the good and the bad times when making business plans. Hopefully with the points I’ve mentioned above, you can arm yourself for the future. If at any point you get confused, it’s time to contact a reliable business attorney (and a financial advisor) who can inform you of your rights as a business owner and can help ensure you continue to operate over time.

XO KUNBI

Please note that this blog post is for informational purposes only and is NOT a substitute for legal advice. I am a lawyer but I aint your lawyer. Every situation is different and case and fact specific. So contact an attorney in your jurisdiction for more specific advice.