Finance & Career
According to a report from the Federal Emergency Management Agency (FEMA), 40 percent of businesses do not reopen following a disaster. And another 25 percent fail within one year. If you think that getting past the one-year mark means a company is out of the woods, think again. The United States Small Business Administration found that more than 90 percent of companies fail within two years of being negatively affected by a disaster.
The United States has not had a pandemic disaster that caused the closure of so many businesses in more than a century. These are completely different economic times than the last pandemic. In essence, we are in uncharted waters because this disaster is unlike our usual weather disasters in Alabama. Weather disasters may not close all businesses. Loss of utilities is a major concern along with public health issues. In this disaster, public health issues are the most important parts of not only the disaster but also the reopening of businesses.
The State of Alabama will allow closed businesses to reopen in phases. Specific information about different types of businesses and the Alabama state requirements is available in a PDF issued by the Small Business Emergency Task Force. In your reopening plan, please download the PDF and look at the required provisions for you to reopen based on your type of business. This is the Phase 1 list of requirements specific to an individual’s business type. Remember that not all businesses were required to close.
Around 75 percent of businesses do not have a disaster plan. The Eastern Kentucky University’s Online Safety, Security, and Emergency Management Program offers information to help you develop a disaster plan for your small business. Consider having a business interruption insurance policy for the future. Even though you may not be able to put money in savings right now, consider having enough in savings to cover your operating expenses for one or two months.
To reopen successfully, a business will need employees, vendors, and customers. The key to having success with all three is good communication.
If you had to lay off your employees because of the coronavirus, stay in contact with them. The Alabama Department of Labor outlines basic information for employees and employers who have been affected by the Coronavirus Emergency Declarations.
If your employees were not completely laid off but were put on part-time hours, they may still qualify for unemployment compensation. Some businesses may have changed their hours of operation or reduced the number of days they were open. The employer can file forms for the employees to collect the funds for reduced hours worked.
A Coronavirus and Unemployment Insurance Benefits Questions and Answers document explains that employees who are offered their jobs back and refuse to return to work can face disqualification for unemployment benefits. This needs to be communicated to your laid-off employees. With the added $600.00 per week from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, employees may be making more under unemployment than they received working. Employees need to know that in Alabama they can lose those unemployment benefits funds if they refuse the offer to return to work.
An employer should contact vendors as soon as an opening date is anticipated. Remember that there will be many businesses trying to open at the same time creating a supply-and-demand issue. You may be limited to storing perishable supplies, so you do not want to over-order. You can look back at previous months to determine correct inventory levels. Economic pent-up demand may have a higher than usual flow of customers for the first few days or weeks. Couple this with the stimulus monies paid individuals, and the opening may be more than anticipated depending on the type of business. Many who are either retired or have continued to work on their employer’s payroll may consider the stimulus payments extra money, and they will look for a place to spend it. Apply good budget principles because this rush to the stores to spend money will eventually slow back to normal.
Your customers will likely return but the question is when. With businesses opening in Phase I in Alabama, many will ask, Will I be safe shopping in your business? The more you can reassure your customers that you are taking steps to ensure their safety, the more likely they will be to shop and open their wallets. Your assurance of safety can be included in your community advertising and posted in your business for the customers to see.
Additional help, information, and resources are available from the US Small Business Administration.