Finance & Career
On April 30, 2020, at 5:00 p.m., certain Alabama businesses can partially reopen under orders announced by Governor Kay Ivey. Others must remain closed. Here are the details.
What Can Open
The multiphase opening plan is called Safer at Home and applies to retail stores and beaches. Gatherings of fewer than 10 people are allowed, and people are required to maintain six feet of social distance space. The governor’s order defines a beach as the sandy shoreline area abutting the Gulf of Mexico, whether privately or publicly owned, including beach access points. The Safer at Home order also allows elective medical, dental, and surgical procedures unless the State Health Officer determines that performing such procedures would unacceptably reduce access to personal protective equipment or other resources necessary to diagnose and treat COVID-19.
The order asks all employers to take reasonable steps to protect their employees by avoiding gatherings of 10 employees or more, maintaining six feet of separation between employees, regularly disinfecting frequently used items and surfaces, encouraging handwashing, preventing employees who are sick from coming into contact with other people, facilitating remote working arrangements, and minimizing employee travel.
The businesses allowed to open can have no more than 50 percent of the occupancy load within the store as determined by the local fire marshal.
The order states, “This emergency maximum occupancy rate shall be posted in a conspicuous place, and enough staff shall be posted at the store entrances and exits to enforce this requirement. An employee of the retail store may not knowingly allow customers or patrons to congregate within six feet of one another. The retail store shall take reasonable steps to comply with guidelines on sanitation from the Centers for Disease Control and Prevention (CDC) and the Alabama Department of Public Health. The operator of any business, government office, or other establishment open to the public shall take reasonable steps, where practicable, to protect their customers, constituents, or other guests by avoiding gatherings of 10 or more such persons, maintaining six feet of separation between such persons (except for those persons who share the same household) and regularly disinfecting frequently used items and surfaces.”
Businesses should practice good customer service and risk management by placing an employee at the entrance and exit doors. This is a good first step in welcoming customers back. The employee can talk to customers as they enter and maintain a count of how many people are shopping in the business. The employee would also be available to tell customers about new business safety requirements and point their attention to the newly posted rules and occupancy requirements. Businesses should also continue to comply with the Americans with Disabilities Act requirements.
Restaurants Continue as Take-Out Only
Restaurants, bars, breweries, or similar establishments shall not permit on-premises consumption of food or drink. These businesses may continue to offer food for take-out or delivery provided the social distancing protocols are followed. Such establishments are strongly encouraged to offer online ordering and curbside pickup of food.
Not All Businesses Can Reopen
Entertainment venues such as nightclubs, bowling alleys, arcades, concert venues, theaters, auditoriums, performing arts centers, tourist attractions including museums and planetariums, racetracks, indoor children’s play areas, adult entertainment venues, casinos, bingo halls, and venues operated by social clubs will not reopen under this order.
Close contact service providers such as barbershops, hair salons (other than hair restoration centers), waxing salons, threading salons, nail salons and spas, body art facilities and tattoo services, and massage therapy establishments and services (other than for medically prescribed services) will not reopen.
Athletic facilities and activities such as fitness centers, commercial gyms, spas, yoga or barre and spin facilities, sports that involve interaction with another person of closer than six feet, activities that require use of shared sporting apparatus and equipment, and activities on commercial or public playground equipment will not open.
At 50 Percent Occupancy, Will Your Business Be Profitable?
Business owners now need to decide if they can afford to open under the 50 percent occupancy rules. Most businesses have fixed and variable expenses. If you cannot renegotiate your fixed costs, can you afford to reopen with reduced customer traffic? If you are leasing and your lessor will reduce your monthly lease expense to a level that will allow you to remain in business, your option to reopen is favorable. Customers may be reluctant to stand outside, six feet apart, waiting in line to go in to shop. If your business cannot lower its costs while at the same time experiencing lower customer traffic, your profitability may not justify continuing in business.
Understand Your Debt
Your vendors may let you go a season without honoring your accounts payable. Everyone knows that we are in terrible economic times for a small business. If your credit is cut off from your vendors, you may not have the choice to keep the business going. Seek counsel from your accounting and legal professionals to help you make the decision. If you choose to close and have a going-out-of-business sale, get legal advice first. The State of Alabama has laws pertaining to bulk sales, and you must abide by those laws.
You may be tempted to borrow against or encumber your personal assets to open or remain in business. With the uncertainty of the future with the coronavirus, you may not be wise to risk both your business assets and your personal assets. Some small business owners have most of their asset base in their personal assets and fewer unencumbered assets in the business. For some business owners, their home is their largest asset and professional legal and financial advice should be sought before allowing a lien to be placed against your personal residence. Here again, communication with others is wise.
What to Pay First
Pay your sales tax bill first. Getting behind on taxes will destroy the future of a small business. Have a separate bank account just for taxes and pay them on time to prevent penalty and interest costs from accruing. Reduce your other costs as much as possible because no one knows when or if we will ever get back to normal business operations. We may be faced with a new normal as our customers are also adversely affected by this and other disasters. Please get help from other professionals to assist you in making decisions during these tough times.
Money in the Alabama Economy
The Small Business Administration has loans available for small businesses during a declared emergency. These business loans can help sustain small businesses under the guidelines for reopening. Although these loans will help during the reopening phase, they will not last forever. A lot of stimulus payments have been sent to your customers, but the biggest question is, When will they feel like it is safe to shop again? Without sustained customer purchases in the days and weeks ahead, can you justify keeping your business open?