Seven Concerns Small Business Owners Have Now
Whether they’re running a remote startup or a brick-and-mortar company, many small business owners share the same concerns. No one likes uncertainty. Many feel that one crisis brings another, but with crisis comes opportunity. As their accountant, you are in a position to help. Why? Because sometimes you understand your client’s business even better than they do.
Seven Reasons Business Owners Lose Sleep
There are many types of businesses. Your clients might be big or small. They might be in the retail, manufacturing or service sector. Everyone might not be harboring all seven worries, but one or two will likely hit home.
1. Will I be able to bring my business back to where it was before the pandemic?
Industries were affected differently. Some adapted early. Others profited. There are lessons to be learned.
The real question: If customers bring in the revenue, how will I get my customers back? Your client base is your greatest asset. Because of the pandemic, they have gotten used to not shopping at your business. Many are buying online or getting home delivery.
Strategies to discuss: There are many possible solutions. Start by building a database of your clientele with contact information. Assume you will need to reach out through multiple channels including social media, email, text, surface mail, online marketing and conventional advertising. Use these channels to engage with previous clients. Let them know you are open for business, and give them an incentive to return. This could be a loyal-customer discount or free food at your store. Emphasize that you are observing all the recommended pandemic protocols.
2. My costs are rising faster than I can increase prices without losing customers.
A cynic might conclude that everyone who lost business during the lockdown is attempting to make it all back in one month. Meanwhile, consumers have high levels of pent-up demand. They are ready to spend.
The real question: If I cannot absorb the price increases to keep my costs low, I will put myself out of business. What can I do?
Strategies to discuss: You are not alone. Many retailers and restaurants have raised prices. This is a good time to focus on comparison pricing. Supermarkets might display three carts filled with identical groceries to show their prices compared to the prices of competitors. The point is the basket is cheaper at your store. Running sales is another strategy. The list prices are now higher, but the discounts get attention. Everyone loves a bargain. For the long term, you can shop for alternative suppliers.
3. How am I going to restaff in a tight labor market?
Walk into any local business. There are less sales staff on the floor. Fewer registers are open. Wait times are longer. Businesses don’t have the staff.
The real question: How can I retain the staff I’ve got and hire more people besides paying them more money?
Strategies to discuss: The labor market is artificially skewed by the continued payment of pandemic benefits by the government. This should change soon. People will be looking for work. There are signs of wage inflation. The first step is to confirm your business is paying hourly wages that are competitive for similar jobs in your local market. As an example, in nearby Lansdale, PA, outside Philadelphia, the LIDL supermarket chain is paying starting rates of about $15.00/hour for cashiers and $19.00/hour for managers. Once you know your pay scale is in line, realize people are motivated by more than money. They want to know they will get a certain number of hours each week. Flexible hours help. Many people want a career path, not just a job. Benefits like health insurance and tuition reimbursement can make your job posting more attractive.
4. What would I do if my rent shot up?
If my suppliers are pushing up their prices, it seems logical landlords will follow suit.
The real question: Could I continue to operate my business if my rent were to double?
Strategies to discuss: Your rent is tied to the terms of your lease. The lease runs a certain length of time. Because the pandemic has created cultures of working from home and online shopping, brick-and-mortar locations have been facing serious problems. As a business owner renting space, you know the length of your lease. Shop around. Cost out alternatives. Calculate the cost of physically moving. If you can lease property elsewhere at a rock bottom price, it may be worthwhile to buy yourself out of your current lease. If your lease is up for renewal shortly, you can negotiate from a position of strength. Your landlord likely won’t double your rent if you have attractive alternatives, especially while companies are seeking to reduce office space and retail business is moving online.
5. More government regulations are coming. How will I comply?
Climate change is on everyone’s mind.
The real question: If the wind is literally blowing toward a green, sustainable economy, what’s it going to cost me?
Strategies to discuss: You aren’t alone. You belong to an industry with trade associations. You have likely forecast the impact of regulations and developed a template for member businesses to address them. Trade groups are likely lobbying lawmakers. Accountants are in a position to help. More regulations mean more reporting and record keeping. Accountants can advise how much compliance is going to cost. If they believe your pricing is fair, they should be OK.
6. Rising health care costs are always an issue.
Health care costs have traditionally risen far in excess of inflation. The population is aging. This means people will require more health care.
The real question: How can I keep this expense from getting out of control?
Strategies to discuss: The federal government has been attempting to rein in health care costs for years. You are not alone in this fight. Your business works with a benefits provider offering different health care plan options. There are ways you can address the issue, bearing in mind your employees must be treated fairly and equally. They can choose the plan they prefer from a menu of alternatives offered by the provider. Costs can be kept down by choosing plans that have higher deductibles. There may be savings if your employee has a spouse covered by a plan at their place of work. Employees can shoulder a portion of the health care plan costs.
7. When will I need to pay back those PPP loans?
There’s no such thing as a free lunch.
The real question: Maybe there is such a thing as a free lunch… Can my PPP loan be forgiven?
Strategies to discuss: The clue is in the name: Paycheck Protection Program. According to the SBA, First Draw and Second Draw loans can be forgiven if three criteria are met: employee and compensation levels are maintained, the money received is only spent on payroll costs and eligible expenses and at least 60 percent of the proceeds are spent on payroll costs. The borrower needs to apply for loan forgiveness within a specified period, otherwise it needs to be repaid. An accountant can help.
Many businesses think of accountants as people who file required paperwork in a timely manner. They can also be business consultants and problem solvers.