It's clear that Oregon's economy is taking a major hit as the measures being put in place to keep us safe from the rapid spread of COVID-19 take their toll. For small business owners, the impacts can be staggering: retailers forced to close and lay off workers, restaurants unable to operate on a dine-in basis, gyms, hair salons, the list goes on. What can they do to help them survive the coming weeks and months? We asked Georgia Lee Hussey, founder and CEO of local B Corp wealth management firm Modernist Financial, for the four most important pieces of advice she could offer to business owners facing this crisis.
1. Make a cashflow projection spreadsheet for the next 12 months
“I often talk about how cash is queen and our job right now is to take as good care of her as we possibly can. I highly recommend that your business owners, no matter the scale of the company, have a cash flow projection tool that they build. It's pretty simple: I would recommend doing it on a monthly basis, or if you feel like things are really tenuous, weekly. I'm going to give you a formula: You take today’s bank account balance, you add any expected revenue you’re going to get this month, you subtract any necessary expenses you know you’ve got to pay, and that’s going to give you your projected bank account balance at the end of this month. Then if you create a spreadsheet that does that for the next 12 months, let's say, then you can see when there's going to be moments when you're going to hit a cash flow issue, and then we have numbers. It’s really helpful so we have a clear set of signals telling us what decisions might need to be made.”
2. Take advantage of cheap credit by requesting increases on the credit limits of all existing credit cards
“Credit cards don't seem to be locking up yet. I'm recommending my clients go to their credit cards and request increases on their credit limits. Most of my clients are paying them every month and they usually have one or two cards that are empty. Identify which of those empty cards might have a zero percent offer on them, and then we’re recommending that you move some of your recurring bills to the zero percent card so that will help you take care of your cash. It’ll let you hold on to more of your cash now but you won’t be having to pay the interest on that for 12 to 16 months.”
3. Examine your recurring expenses, and try to negotiate some reductions.
“[At Modernist Financial] we’re looking at all of our recurring expenses, especially those with large multinational companies like Comcast for example, and asking for reductions in fees so we can retain a full retail price for all of our local partners and businesses. Because I want to keep as much cash flowing to my community as I can.”
4. Be transparent and open to dialogue
“If you understand your situation, go to a vendor and say ‘I’m in a cash crunch as I’m sure you are right now, can we work out some terms here? This is how much I need to buffer for. Can I take this bill and pay it over three months? Or can I get a break this month and start paying you next month? I would highly recommend transparency and open conversation about what you need and what that partner—whether it’s staff, vendor, or client—what they need. So that together we can create solutions that serve everyone. Because we're going to end up in a better place when we are on the other side of this. ”