In times of crisis, small business owners should be prepared to face upcoming economic struggles.
These are the following suggestions to follow:
1- Update your business financial statements
SBA, lenders, landlord, everybody will request. To say” my business is in a struggle” is not enough, prove it !!!
2- Negotiate the rent.
Decrease, pro-rate, pay a percentage of sales. Anything you can negotiate with the landlord in order to fulfill your commitment and avoid being late.
3- Extend the lease and request that some months will be placed at the end.
This way will help you to avoid paying rent now as long as you pay those at the end of your lease agreement.
4- Negotiate with your suppliers and vendors.
Everybody wants to collect now but you may be able to pay one at a time. be upfront with each one of them, negotiate terms and start paying.
5- Consult your attorney and check your lease.
Many lease agreements contain clauses such as expenses, pro-rations, and occupancy where you may be able to show the landlord and save some expenses.
Commercial lease agreements are not a typical general commercial contract. Those include many clauses, specific to your business.
6- If your business is a franchise, your lease agreement may include rent assistance under special circumstances.
In rare circumstances, the lease agreement may be signed by your franchisor in part or in full.
7- Check your business interruption insurance ( if you have any ). You may get to collect insurance.
8- Adjust discretional expenses. Right now may not be a great time to remodel the kitchen or install that nice chandelier you saw on sale last month
9- Communicate with your lender.
Always consult with your attorney first. The last thing you want is to invite the lender to call the note ( require a full payoff).
10- You paid expenses reserves with your loan commencement, the lender may ( may not) let you use those reserves in order to save your current cash flow as the ” Stay-at-home” ordinances may continue for longer than expected.
Always avoid confrontations and look to negotiate a favorable deal for everybody.
In short, be pro-active, negotiate, be upfront and face the challenges.
Always avoid not returning the calls, collections or pretend the world will be ok tomorrow. Communicate and you will have many more chances to succeed.
Good Luck
Cesar Cepeda is a Certified Franchise Consultant and Business Broker , can be reached for free consultation at cesar@franmartusa.com