As all fifty states have braced for the COVID impact some struggling businesses have started the process of re-opening their doors. Entrepreneurs and workers who rely on self-employment income are struggling to stay afloat. So how do you stay positive when your business is struggling? How do you keep your small business alive? How do you continue to move forward through an impending recession? What actions can you take to get your business out of a tough financial situation?
“I’ve had my fair amount of moments when I thought about throwing in the towel, particularly when I didn’t gain the traction I worked so hard to achieve. When that happens, I remind myself that business ownership is tough, but getting through the frustration is always worth it.” Joseph Liu is an entrepreneur with some very inspirational thoughts that are relevant to our current situation. He talks about four lessons he learned that got him through the difficulties that come with self-employment. https://www.fastcompany.com/90226447/how-i-got-through-the-tough-times-of-running-a-business
- “If it were easy, everyone would be doing it.” This term is thrown around often, but truly applies to the struggles of launching your own business and putting in the work to grow it. Joseph goes on to explain that business owners who keep going through challenging times stand out from the crowd.
- The second thought “This is a marathon, not a sprint” is about finding a routine that can be sustained as opposed to exerting all of your energy at once.
- Joseph advises that we “don’t stay down for too long.” Entrepreneur’s carry the weight of their business’ success and failures, so it is important to be resilient when things go badly.
- “You’re the average of the five people you spend the most time with.” This quote from Jim Rohn focuses on the benefit of surrounding ourselves with role models who are better than us.
Owning A Small Business
Small businesses have the unique advantage of being able to shift strategies quicker and more efficiently than their large competitors. It is important to use this advantage to refocus on how to adapt to the new normal. Many small businesses were able to take advantage of funding under the CARES act. However, the limited availability of the loans may have kept you from benefiting. You can reference our previous blog regarding taking out a business loan for more insight. If your business has made it this far through the economic shutdown, reopening should give you hope of survival. Depending on your situation, there are several steps you should take in order to most effectively get back to work.
Figure Out Your Business Strategy
First, it is important to put together a strategy for your reopening. Which of your employees need to return to the office, and who can continue to work from home? Some of your employees will have reasons to be concerned for their well being, while others will be more anxious to return to the office. Reopening in any capacity requires careful consideration into what changes need to be made to your day to day operations in order to keep everyone safe. You will need to understand what concerns your employees have in relation to meeting with clients and maintaining social distance. For employees that continue to work in remote environments, it is important to fine tune your expectations of them in order to improve efficiency.
Your Business Supply & Demand
Another thing to consider is the demand you are currently experiencing. If you are like most small businesses, you will be experiencing lower than normal demand as consumers are concerned about their own financial situations. If this is the case, you will need to look at where you can cut costs while still running smoothly.
Do you have anyone on your payroll who just is not the right person in the right seat? Is it possible that you need to reorganize job positions, or remove some positions entirely? Many struggling businesses have found that working remotely saves the company a lot of money. This is worth considering if this move makes sense to your situation. One of the major concerns with working from home includes network security. There are serious legal issues that could arise from having sensitive data stolen, so you should ensure that security is a top priority.
Employees Safety
Finally, it is important that you put your employee’s safety first. Being open and honest with every member of your staff is important to determine what new responsibilities they have at home, or health concerns for their families. You should listen to their concerns and create company policies that best tend to the needs of your employees. Employees that are happy and treated with respect will be the key to getting through this shutdown.
If you have decided that the only way to get through this crisis is to permanently close up shop, it is important to seek the appropriate advisors to help you with this transition. SBA provides the following steps in how to close your struggling business.
SBA Instructions For Closing Your Business
- As a sole proprietor, you can make the decision to close at any time, but other types of entities will need to have a written agreement with the other shareholders.
- If you have an LLC or other corporate structure, you will need to file dissolution documents with the state you set it up in to avoid tax filing requirements.
- Cancel your registrations, permits, licenses and business names.
- Make sure to comply with employee payment laws federally, and in your state.
- Resolve financial obligations with creditors.
- File final tax returns and sales tax returns
- Cancel your EIN number, notify federal and state tax agencies, and verify that you have met all IRS requirements
- Maintain financial and tax records after closing.
If you find the right buyer, selling your business might be the best decision for you. It is important that you consider what is your net income. You will be paying off debts and all the expenses that come with selling your business. Make sure to prepare a sales agreement to be reviewed by an attorney. All of the inventory in the sale will need to list the names of seller, buyer, and business. It is important not to leave any assets out of the sale. If selling, or closing organically is not an option, you may need to file for bankruptcy. Whatever you choose to do, it’s important to use a trusted advisor who can assist you in making the best decisions.
Who Can You Trust With Your Business?
Our advisors at Molen & Associates are here to help guide and advise during this unsure time. Give us a call to help you decide which decision is best for you and your business.
Austin Long
Tax Advisor
