5 Small Business Lessons from the Covid Pandemic

 In Business

We are now officially one year into the Covid-19 pandemic, as declared by the World Health Organization on March 11, 2020. As tragic as this pandemic has been (and continues to be), as a CPA and Attorney for small business clients, this period has been one of the most interesting and enlightening of my career. I have always known that small businesses were the lifeblood of the U.S. economy, but this pandemic has exposed that fact better than any other recession or challenge that I have seen in my lifetime.

How Have My Clients Fared So Far?

I am under no impression that the pandemic is over as of today, and it certainly has not been declared as such by the experts or any government officials with knowledge of such matters. However, by all indications, it does appear that the U.S. economy has begun to recover. Being a small business CPA and Attorney during this time offers a unique lens into how American individuals and businesses are handling the pandemic and its economic consequences. Here are some things I have noticed among my client base:

  • Impact has been Disparate – The pandemic has not affected every person or business equally by any stretch. I have had some clients who have been very hard hit (especially those in the travel and tourism industries), clients who have received unemployment benefits for the first time in their lives, clients whose businesses were temporary or permanently shut down, clients who have lost jobs, and several, unfortunately, who have actually contracted Covid and recovered (thankfully—to this point—I am not aware of any of my clients whose lives were lost in the pandemic). On the other hand, I have a large number of clients whose businesses were impacted only temporarily, and even some that have thrived despite the pandemic. Many of my clients are in tech and engineering occupations, and many of those industries continued to grow despite the challenging times. Additionally, several of my clients that had always operated their businesses remotely did not incur any additional costs due to the pandemic or experience a loss of revenue.
  • Government Aid Has Helped – In my opinion, one of the best things that our government has done was provide direct help to small businesses in the form of Paycheck Protection Program (PPP Loans) and Economic Injury Disaster Loans (EIDL) to help our country deal with the impact of the pandemic. This direct aid has helped several of my small business clients recover quickly from periods of time in which their businesses were shuttered. The overwhelming majority of my clients that received PPP Loans have had them forgiven and were able to get the boost they needed to survive the challenging times. In fact, most did not need and did not avail themselves to the second draw loans that were made available at the end of 2020/early 2021. As a taxpayer myself, it is great to see small businesses taking only help that they actually need and leaving aid available for the businesses who have suffered greater impacts—if a second draw is not necessary for that particular business to continue operations.

I would say overall, given those two things I mentioned that the majority of my clients have fared well under the circumstances. It is great to see how resilient my clients and their businesses have been, how many of them have been open to changing how their businesses operate, the services they offer, and how they market to their customers. The ingenuity and determination I have seen among my clients located all over the U.S. (and some internationally) has been very inspiring and provides a lot of hope for the future.

Here are some of the lessons that small business owners have learned during the pandemic.

Lesson #1- Have a Team of Professionals on Deck to Assist Your Small Business During Challenging Times

When the first PPP Loans were granted in April 2020, the funds ran out within days—which was much faster than banks, legislators, or small business owners could have predicted. No one foresaw that the need would be so great and that the billions of dollars in appropriations made by Congress would be so drastically insufficient to cover the need. The first businesses that received funds during that short period were generally those that had relationships with bankers, CPAs, and Attorneys. Because those relationships had already been established (oftentimes over several years), those professionals were already on deck to make sure that the businesses’ applications were ready to go, all payroll reports were available and filed, determinations were able to quickly be made in terms of who potentially was eligible and who was not, and advice could be provided with regard to which lenders were approving loans quickly, which had portals available, and other important information. It was very unfortunate to see how many businesses got left out of the first Congressional appropriation due to not having relationships with bankers, CPAs, and Attorneys. Fortunately, further appropriations were made to accommodate the need, but the lesson cannot be missed that there needs to be someone that small business owners can call “in case of emergency” on topics such as this. Trying to find someone to help during crunch time, where a relationship has not yet been established can oftentimes be next to impossible.

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Lesson #2- Have the Ability to Work Remotely as Best You Can

From what I have seen from my clients, what I have discussed with other professionals, and what I have read and seen in the news, the businesses that have fared best have been those that were able to quickly transition to offering/performing (as much as possible) their products or services remotely; and especially those who had always operated that way. Even many of the coworking spaces were shuttered for significant periods of time during the pandemic, and business owners that typically liked to work from coffee shops or other locations outside of the home were unable to do so. While it is great to have an option to work outside the home, having a dedicated space inside your home that is comfortable, has all the supplies/tools you need, and where you can work with little interruption is priceless. We really cannot view this as a luxury anymore as small business owners—it is almost mandatory at this point. Covid will not be the last pandemic to hit our country, and if we take the best steps we can to minimize future impacts to our businesses and adapt to potentially needing to work from home in the future, we can ensure that our businesses are resilient enough to survive the challenges that are sure to come. Of course, some businesses are difficult to operate remotely, but even restaurants have gotten creative and offered delivery services that previously did not exist, expanded carryout options, and improved their marketing to ensure their survival during difficult times.

Lesson #3- Establish Business Credit…Before You Need It

Many small business owners do not try to establish credit for their businesses until they need it. That is not advisable. One of the first things the banks did when the pandemic hit was pull back on lending and credit, and it was one of the biggest reasons that programs like the PPP and EIDL were necessary. However, many of my clients already had established business credit cards, lines of credit, and/or had successfully paid off installment loans in the past and these connections enabled them to quickly receive PPP Loans and/or access existing credit lines or installment loans from lenders who had assisted them before and were aware of the business’s creditworthiness. If you are reading this and do not currently have business credit, definitely look into obtaining it if you have a viable business.

Lesson #4- Keep Some Extra Cash on Hand for Uncertain Times

Although it can sound easier said than done, keeping some cash around for emergencies is extremely important. Many of the businesses that made it through the pandemic were the ones that had sufficient cash on hand to meet the demands of purchasing additional cleaning supplies, modifying locations to accommodate social distancing, investing in new equipment and PPE, and in some cases paying employees who were unable to work due to the pandemic. Now that our country is on the road to recovery, it is important to make sure that our small businesses have a nest egg that will enable us to meet the demands of this continuing challenge of Covid and also other unforeseen circumstances that may be around the corner.

Lesson #5- Have a Plan for Your Small Business If You Become Sick or Incapacitated

One of the biggest lessons that many small business owners have learned from the Covid pandemic is to have a plan in place in the event that the owner or a key employee becomes sick or incapacitated. While this plan can range from simply notifying customers/clients of your unavailability to having backup personnel that can continue the work, knowing what will happen if you are unavailable is very important to consider. This is actually one of my biggest lessons from the pandemic as a solo practitioner, and I have since put such a plan in place for my own small businesses.

Thanks for reading this article! If you would like to discuss ways that your business can weather economic storms that may arise, feel free to contact me using the form below.

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