A month ago, I didn't know what "social distancing" was. A week ago, I flew to New York City to teach at IECSC. I arrived on the redeye on Saturday morning. I went out for a slice of New York's best cheese pizza, then went back to my hotel. At 4pm, New York had declared a state of emergency. The Javits Center needed to be emptied of all exhibitions so that this massive conference center could be used as triage for Coronavirus screening if needed. IECSC New York was cancelled, and I was back on a plane to Seattle on Sunday morning. It was the most expensive slice of cheese pizza I have ever purchased. This was the first impact the Coronavirus has had on my business. This doesn't really compare to what many of you are experiencing in your businesses. Many of my clients are reporting a decline in sales upwards of 75%. Like you, now I know what social distancing is. Let’s not be naïve. This is going to affect us. We don't know how much or how long.
We have heard that the SBA is making funds available to small business owners under a special new program. Information is available on their website (https://www.sba.gov/disaster-assistance/coronavirus-covid-19). When I spoke with a couple of local bankers yesterday, they had not received any information about this program or how to administrate it. It seems like this program is a work in progress. A different and established program, the "SBA Express" funds loans up to $350K on a line of credit and is a relatively simple application process. Initially, it is interest only and then converts to a term loan. This might be a better and more expedient loan for you to pursue. You can submit an application at any SBA bank or lender. Prior to applying, put together three years of business financials, tax returns, and a personal financial statement. Be aware and prepared to explain any non-favorable issues on your credit report. Also, be able to articulate how you intend to use the funds.
In the meantime, let's stay on the preemptive side of this thing and do what we can to protect our business and cash flow. Follow the steps and recommendations regarding employee hygiene and facility sanitation. Communicate these to your guests. Some of my clients have closed relaxation areas and salt rooms. Others have placed a postage sponge next to the tip envelopes for their guests to use. Stay connected to your guest via phone calls and e-mails during this crisis to see how they are doing.
Negotiate upcoming payments with your equipment lessor, bank, creditors, and landlord. Talk with them. Show them how the number and spending of guests that you are currently experiencing is declining compared with last year. Let them know about your cancellations, re-bookings, and what your guests are telling you. Talk with these creditors about the seasonality of your business and how the this public health crisis will affect you. Discuss what your current breakeven is, and what you think your sales will be in the upcoming months. Ask for an abatement of current and several upcoming payments. Propose that these payments be added to the end of the current term of your agreement. Take whatever steps necessary to budget and conserve cash flow.
These are uncharted waters for our industries. We do not have a roadmap and our "best guess" is the best we can do. Hang in there. We're in this together.
Let me know what we can do to help.
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