It can be said that the fallout from COVID-19 is as though each state in the nation is experiencing a class five hurricane at the same time, for weeks on end. With a steady stream of new stay at home measures, we know the impact to our economy is going to get worse before it improves. And even as we expect April to be a very rough month, there are a few rays of light amidst the storm.
We’ve met one-on-one (virtually) with traded sector businesses across the region and have been inspired by their ability to quickly adapt, innovate and rapidly change their operations in an ever-shifting environment. And while we offer advice and help to navigate resources/aid, many are already on the right path to stabilization – the first step towards survival. We’ve seen great creativity in businesses “extending the cash runway”.
Here are a few common themes that businesses are implementing:
- Reaching out to key people who can lower their short-term cash burn rate, starting with:
- financial institutions (banks, credit unions & other lenders) to ask for temporary suspension of mortgage, working capital loan payments or to access additional cash resources
- landlords to talk about temporary rent deferral
- material suppliers, distributors and customers to adjust payment terms
- Reducing operational costs real-time to adjust to falling (or even zero) revenue by:
- enacting voluntary pay cuts, strategic furloughing, or when absolutely necessary, cutting staff (while at the same time keeping connected with those former employees)
- renegotiating terms on A/P and A/R
- suspending or cutting back on discretionary spending like marketing and advertising until the appetite for consumer/customer purchasing returns
- Figuring out new ways to conduct business and/or shifting operations to provide different products and services
The solutions found by small business owners in the coming weeks is key to our future economic rebound.
There has been a great deal of press and emphasis on federal government support and local efforts to help carry our most impacted businesses through what is still an undefined period of time before things return to some degree of normalcy. These resources are important and act as a lifeline to many companies – assuming the dollars get to businesses in need on a timely basis. At the same time, there is not enough money in the U.S. Treasury, let alone local government and philanthropy, to cover all the impacts created by overnight shut downs of huge parts of the economy.
We are releasing two series (podcast available here; innovation series available here) that will provide details about local companies, their stories and what we are constantly learning. Our hope is that these pieces will spark ideas for creative solutions in our business community.
EDCO has made a conscious decision to remain at full staffing to provide the help needed to our traded sector businesses through this time. Please don’t hesitate to contact any member of our team at our five offices across the region with requests, or to share information about what you are doing to adapt and innovate.