Thoughts for Business Owners Trying to Run a Business During a Pandemic

Who would have thought we’d be in a situation like this? This is the 21st century, not the Middle Ages. The need for action is certain, but the need for panic is not. In fact, panic makes the matter worse for all concerned.

On the personal front, take care of yourself first. You need to have your wits about you at a time like this.

• Keep your mind busy with something other than worry. If you have a hobby, now is a good time to engage in it. Read a book; write a letter; call your mother. If working 80 hours a week has limited time with your kids, spend some time with them now. Just speak to them with open-ended questions. Find out what’s on their minds. Do something together.
• Help someone else – you’ll feel good about it.
• We’ve all heard the saying that every problem is an opportunity. One of the best ways to stay calm is to do something. You can’t sit and fret your way out of this.

On the business front, now is a great time to analyze your situation, both short- and long-term.

• Stay in front of your customers. Send them useful information, or just ask how they’re doing and how they’re handling their problems. Nothing brings people together like shared misery.
• Stay in front of your employees. These people are your second family, and you need them so you can earn an income.
  • Let them know you care.
  • Take visible actions to keep them healthy. In my law firm, for example, we’ve even changed our mail distribution system to encourage social distancing.
  • If you need to terminate some employees, do so following the Discrimination Rules. (See “Reducing Payroll and Avoiding Lawsuits During the Coronavirus/COVID-19 Pandemic”)
    • At a minimum, maintain their health insurance for a while.
    • Part of your strategy might be trimming some less productive employees .
  • Think long-term. We will get past this, and there may be some other steps you can take now to emerge stronger at the other end.
• Stay in front of your lenders and trade creditors. Again, be proactive. Contact them and be positive about the future while asking for short-term relief. They won’t be surprised by your call, and they’ll appreciate that you made the first call.

An attorney I know at the Missouri Department of Revenue tells me that he normally is gentler with businesses who contact him before they’ve received six letters and the threat of a tax lien. Like so many others, he likes to work with people who care rather than blowing him off until “later.”

Many attorneys like me who work in the insolvency field can help you decide what you want to say during these calls, and, more importantly, what not to say.

Some more specific advice:

• Cash is king! You will need it to get through the next several months.
  • Don’t spend on things you don’t need.
  • Don’t pay the noisiest creditor just to get him off your back.
  • Maybe you can cut employee wages by 20% and not have to lay anyone off.
  • Maybe you should take a pay cut so your employees know you’re in it with them.
• The Families First Coronavirus Act was just enacted on March 18, 2020 and becomes effective on April 3, 2020.
  • It provides for enhanced family leave and sick leave.
  • This will cost you some money in the short-term, but covered employers are entitled to a refundable tax credit equal to 100% of the qualified sick leave wages and qualified family leave wages paid by employers for each calendar quarter.  These refundable tax credits are allowed against the employer portion of Social Security taxes. Please contact your labor or employment attorney for details.
• The SBA has set up additional disaster loans for small businesses.
  • Go to https://disasterloan.sba.gov/ela/ for information.
  • Please note that the governor of your state will have to file the proper declaration with the Office of Disaster Relief. As I write this, neither Missouri nor Illinois has filed the declaration.

And finally, if the worst happens, be proactive and seek experienced legal counsel to help you engineer a soft landing.

• Review your records to confirm which of your company’s debts you might be personally liable on. Remember that your personal liability for sales and employment taxes aren’t dischargeable in a bankruptcy.
• Don’t empty your retirement savings just to make the next payroll if you have no plan for making the payroll after that.
• Don’t take one of those emergency high yield loans with an outrageous interest rate and requiring a personal guaranty unless your attorney or financia advisor thinks it make sense. It usually doesn’t.

Good luck to everybody during these turbulent times!

For additional information for your business during the pandemic, go to Danna McKitrick’s Coronavirus/COVID-19 Resource Center.

Posted by Attorney A. Thomas “Tom” DeWoskin. DeWoskin practices in the areas of bankruptcy, creditor’s rights, and commercial law. He represents creditors, as well as business debtors, and individuals with difficult or unusual financial situations. DeWoskin served as a bankruptcy trustee in the Eastern District of Missouri for more than 35 years.

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