Owning a business is challenging even in the best of times. Add a global pandemic, the likes of which we have never seen in our lifetime, and it becomes much more overwhelming. Often, business owners try to compensate for shortcomings in their business by bringing in more and more revenue. For many people, however, business closures and quarantines have seemingly eliminated that option.
At the moment, you may be running around like your hair’s on fire, trying to find any possible way to bring in more money. You may feel like you are too busy trying to control the present to worry about the future. Take some comfort in the fact that you’re not alone in feeling this. Now more than ever, though, it’s important to remember our “LIFT” principle. Take a breath and consider your legal, insurance, financial, and tax situation, and whether the pillars of LIFT can help you get through this time.
If you need to talk with someone, to brainstorm options about how you can shift from your previous income model to one that will work virtually or in an innovative manner considering current conditions, reach out to a Family Business Lawyer™ and schedule a call to see how they can help.
If revenue is not an issue, and you are ready to pivot, awesome—do it, and let us know how we can support. Here are 3 things that you can do as you pivot to create the most stability for you and your team.
Create or Update Your “Personal Resource Map”
To put it bluntly, you need to be ready for the worst case scenario, both personally and professionally. Setting up an estate plan is important for every individual, even if you don’t think you are rich enough to need one. If you own anything—from a laptop computer, to a guitar, to a house—something will need to be done with it after your death.
There’s also a possibility that you have assets that you have completely forgotten about, like that 401k from a job you had several years ago that you never rolled over. Currently there’s somewhere between 49 and 80 billion dollars in legal limbo that family members cannot claim due to a lack of preparation on the part of the deceased. You don’t want your assets to become trapped in gridlock instead of passed on to the people you love.
When you own a business, there is a whole set of other issues to consider. Putting your wishes into an estate plan, regarding things like a succession plan, will be enormously helpful to whoever is managing your affairs in the event of your death or incapacity.
If a whole estate plan feels too overwhelming right now, at least get an inventory of your assets and business in place, where everything is and how your loved ones/partners and team could access it, if you become ill or die. We’re supporting you to do this with a simple Personal Resource Map process, which you can learn about here: http://www.PersonalResourceMap.com
Or, if you’d rather have help with this on a 1:1 basis, fully virtually, just give a Family Business Lawyer™ a call.
Check Your Business Insurance Policy
Now is the time to call your insurance agent to see what provisions are in your policy to deal with the current dangers to your business’s survival. Many people have something called “interruption insurance”, which can help keep you going if your business is shut down or inhibited somehow by a disaster. Knowing what your policy says will help you prepare for what may happen in the event of an extended closure or drop in revenue.
Apply for Credit and Loans
You may feel resistant to raising your credit due to the risk of going into debt. First of all, you do not need to be afraid of credit—it’s merely a resource available to you. Not maximizing your credit is an unwise move. You’re just leaving money on the table instead when you could be lengthening a credit line to fall back on if you need to. Especially in an uncertain moment like this, it could even be called foolish to let this barrier stand in your way.
Right now, there are a number of opportunities offered through the U.S. Small Business Administration. If you need capital, you can take out one of several different types of loans, depending on what type of business you run. This includes a standard 7(a) loan, which can be up to $5 million, and an “Express” loan with a turnaround time of as quickly as 36 hours. You have options. Look into them sooner rather than later. Speak with a Family Business Lawyer™ if you want assistance.
And, make sure you’ve considered these 3 foundational steps to using credit 3 wisely. And, as a business owner, be sure you are using your access to business credit, rather than maxing out your personal credit cards, which will hurt your credit score. Whereas business credit does not.
Stay Updated on Any New Tax Laws
The federal government, as well as many state governments, has extended the income tax due date three months into the future. While this is only relevant to sole proprietorships, other changes to tax law, both for individuals and businesses, are currently being debated. Be sure to pay attention to the outcomes of these debates to plan for the future as much as you can.
Above all, don’t be afraid to ask for help. We are all going through this together, and legal and financial professionals are ready to answer any questions their clients may have.