In response to criticisms regarding the Paycheck Protection Program, the government has introduced and passed the PPP Flexibility Act of 2020. This amendment aims to alleviate some concerns regarding the business aid program by extending due dates and allowing wider use of the funds.
The bipartisan bill was passed by the Senate without objection on June 3 after it flew through the House the week prior with a 417-1 vote. On June 5, the president signed the bill into law. Now the SBA and Treasury must interpret and implement the new rules for business owners who received loans via the program.
Lawmakers introduced the PPP under the CARES Act in March as a way to help businesses financially hurt by the COVID-19 pandemic. However, the program included what some business owners and small business advocates considered stringent requirements — such as businesses being required to use 75% of their loans on their payroll — spurring Congress to introduce the Flexibility Act.
Let’s take a look below at what the PPP Flexibility Act changes — and what it does not — as well as how it might impact your business.
New PPP Forgiveness Rules
The PPP Flexibility Act, also dubbed H.R.7010, can be viewed in full on Congress’s website.
Here’s a look at a few highlights of how it updates PPP rules:
Borrowers now only need to use a minimum of 60% of their loan on payroll to qualify for forgiveness. The other 40% can be spent on other business expenses, which covers mortgage interest, utilities, and rent. Previously, the PPP required that at least 75% of the loan was spent on payroll, while only 25% was available for other uses.
Borrowers now have up to 24 months or until December 31, 2020 (whichever is first), to use their funds. There was an eight-week requirement before the Flexibility Act’s passage.
Businesses must rehire employees before the end of 2020 for full forgiveness. Previously, workers had to be rehired by June 30, 2020.
Businesses that fail to rehire employees by December 31, 2020, can avoid the penalty by meeting one of two “good faith” requirements: An inability to rehire those who were employees on February 15, 2020/an inability to hire similarly qualified individuals for empty positions by December 31, 2020, or an inability to return to the same level of business activity that the business functioned at on/before February 15, 2020.
Borrowers who receive PPP loans after the Flexibility Act’s enactment date have five years to repay non-forgiven loans. Loans made before the Flexibility Act only have two years. The first repayment can be deferred until six months after the SBA makes a determination on the loan’s forgiveness.
Borrowers must apply for loan forgiveness within 10 months after their covered period ends.
Employers can now receive the deferral of payroll taxes included in the CARES Act Section 2302, even if they have received PPP loan forgiveness.
PPP Flexibility Act Criticisms
Critics have noted that the PPP Flexibility Act does not address all the concerns related to the program. Among some remaining questions include doubts about the earliest date borrowers can start applying for forgiveness as well as issues over the uncertainty regarding the 60% payroll threshold. The new bill also hasn’t changed the PPP’s new applicant deadline of June 30, 2020.
Such qualms led to hesitation in the Senate over the bill’s passage. For instance, Sen. Susan Collins, R-Maine, worried that wording in the Flexibility Act implied borrowers might not receive any forgiveness if they fail to spend 60% of their loan on their payroll. She called such a strict limit a potential forgiveness “cliff” that differed from the PPP’s original ruling of proportional loan forgiveness if the payroll threshold is not met.
However, the SBA and Treasury made a joint statement on June 8, indicating borrowers who fail to use 60% on payroll would remain eligible for proportional loan forgiveness. This interpretation is in line with the initial PPP rules and nixes any possible forgiveness cliff.
Other objections came from Sen. Rod Johnson, R-Wisc., who penned a Wall Street Journal opinion piece arguing for “reforms that will prevent future funds from flowing to organizations that donât need them.”
On top of all those criticisms, the PPP itself remains a complicated beast. Besides the fact that the program proved to be a chaotic disaster when it came to approving applicants and shipping out loans, business owners may struggle with making repayments and receiving forgiveness. Without further action from Congress — be it scraping the program altogether for a more efficient option or making significant tweaks to the current program — we may see some deep economic woes in the future.
Is It Time For You To Apply For A PPP Loan?
If your business’s bank account is struggling and you haven’t sought out financial relief, you may be wondering if it’s time to apply for a PPP loan. These new rules will make it easier to both apply for a loan and give your business more freedom to use its loan. As such, it could be a great time for businesses previously uncertain about PPP forgiveness guidelines or concerned about how funds could be utilized.
On top of that, there are still plenty of PPP funds left in the tank. Based on recent numbers from the SBA, there is over $120 billion in funding left to distribute as of May 30. With just south of $660 billion designated for the PPP in two rounds of funding, there should still be plenty to go around for the remaining businesses that need monetary aid.
Keep in mind that the new applicant deadline for PPP loans remains June 30. As outlined in a bipartisan letter from several Congress members, “the SBA and participating
lenders will stop accepting and approving applications for PPP loans” on that date despite some initial confusion after the bill passed the House that the new applicant date would be extended until the end of 2020. That means you’ll need to decide about applying relatively quickly — it’s unclear if the program’s application date will get extended in the future.
Of course, only you know if it’s the right time to apply for a loan — every business is in a different situation, and the pandemic only complicates things. To help get you started, visit our guide to PPP loans. You can also check out Merchant Maverick’s coronavirus hub for more pandemic-related resources.
The post What The PPP Flexibility Act Is & How It Could Affect Your Small Business appeared first on Merchant Maverick.
These days, we see delivery options everywhere. You can request on-demand delivery for your groceries, prescriptions, and take-out orders. With so many consumers turning to these options for convenience — and safety in light of the coronavirus crisis — you may be wondering: Is there space in the market for you?
Owning a delivery business is a great opportunity for many entrepreneurs. Depending on the niche you plan to serve, you can start your own business with just one vehicle and no employees. What’s more, you can quickly scale your delivery business as demand increases.
Are you considering starting your own delivery business, but you aren’t sure how to start? Keep reading for a step-by-step guide to starting a delivery business.
Why Start A Delivery Business?
One of the main reasons you should consider starting a delivery business is the steady increase in demand and market share.
According to the State of Logistics Report 2019, the market size of same-day delivery services in the US is expected to reach $7.4 billion in 2020 (up from an estimated $6.1 billion last year). What’s more, this report projects market size will increase to $8.5 billion in 2021.
The same report reveals how same-day delivery services are divided by delivery types. Fourteen percent of the market share of same-day deliveries are C2C deliveries (for example, transactions from Craigslist, eBay, and Facebook Marketplace), while 23% are B2B deliveries, and 63% are B2C deliveries.
By starting your own delivery business, you can take advantage of this demand for same-day delivery.
How Much Does A Delivery Business Cost?
Startup expenses for beginning a delivery business vary, depending on many factors. That said, you should plan for the following expenses:
Purchasing or leasing vehicle(s)
Time (your time and your employees’ or contractors’ time)
Cost of operating a physical location (if you have one)
As you plan for your business, make sure you create a budget that accounts for all the expenses listed above as well as any other relevant expenses.
How Much Does It Cost To Become An Amazon Delivery Service Partner?
Perhaps you’ve seen advertisements online for Amazon’s Delivery Service Partner (DSP) program for entrepreneurs. These advertisements state that with Amazon, you can start your own delivery business for as little as $10,000 capital. These advertisements make running a delivery business look easy. All your business comes through Amazon, so there’s no need to find customers, and with very little startup cost, you can begin managing a team of 100 employees who drive a fleet of 10-40 vans.
Amazon makes this program look very desirable, stating that its DSP program is highly competitive and that you’ll profit $75K-$300K per year. However, I advise you to do your research before applying to become a DSP. I’ve seen numerous reviews that break down the costs of operating this type of business, revealing that according to Amazon’s numbers, you’re only likely to profit $7,500 per van each year. This is a very slim profit margin, and to earn this profit, you have to take on a lot of liability.
For more information on the potential downsides of becoming an Amazon DSP, check out this video from Franchise City.
Types Of Delivery Services
There are many possible niches your business can fill. We recommend that you consider partnering with local businesses that frequently need to deliver their products to consumers or other businesses. Here are a few niches you should consider:
Yard supplies delivery
Dry cleaning delivery
Starting A Delivery Service: The Step-By-Step Guide
Once you have an idea of the type of delivery business you want to start, it’s time to take action! Here are the first nine steps you should take to start a delivery service.
Step 1: Make A Business Plan For Your Delivery Business
The first step in starting any business is to make a business plan. We recommend starting with a one-page business plan, in which you list the following information about your business:
The problem your business solves
For more information on writing a business plan, try our article: The ‘How-To’ For One Page Business Plans. You’ll even find a downloadable form on this page that you can use to create your business plan.
Step 2: Look For Funding
Every startup requires capital, and with a delivery business, you have to invest in a lot of equipment up front. If you don’t currently have the funds you need to start your business, we suggest looking into financing options. Here are a few options you might consider:
Business lines of credit
Business credit cards
Merchant cash advances
For more information on each of these financing options, read our article, 8 Ways To Finance Your Small Business.
Step 3: Find Business Software
Finding the right software for your business can streamline your day-to-day operations, and it can even reduce the number of people you have to hire to get your business started. Here are a few types of software that you should consider adding to your business, along with a few software recommendations:
GPS Software: Use this software to locate delivery pickup and drop-off locations. You can use a device such as Garmin for your GPS navigation, or you can use a free app on your mobile device (such as Google Maps).
Mileage Tracking Software: Mileage tracking software helps you bill clients accurately, and it can help you claim business expenses during tax season. One of our preferred accounting software, QuickBooks Self-Employed, has an app that you can use for tracking mileage. Or you can use an app such as MileIQ.
Accounting Software: Every business needs good accounting software. We likeÂ QuickBooks Online and Xero.
CRM Software: CRM (customer relationship management) software helps you track customers’ contact info and interactions. A couple of good options are Salesforce and Zoho CRM.
Website Builder Software: Build a website for your delivery business using an affordable and easy-to-use website builder. We recommendÂ Squarespace and Wix to most business owners.
Time Tracking Software: If you hire employees or independent contractors to drive your vehicles, you’ll need a tool to track their time. Some time tracking software packages even include GPS tracking features. Check out our article, Must-Have Time Tracking Software Businesses Should Know About, for a few recommendations.
Step 4: Source Equipment For Your Delivery Business
One of the big startup costs you should anticipate is the cost of equipment. Depending on the types of products you decide to deliver, you’ll need to choose equipment that can help deliver shipments safely and efficiently. Here are a few examples of equipment you may need:
Vehicles (sprinter vans, pickup trucks, freight trucks, trailers, or refrigerated trucks, depending on your shipments)
Cell phones or radios for all team members
Tablets and card readers for processing payments and signing off on orders
As you create a list of the types of equipment you need, you should also consider how you’ll pay for that equipment. Will you purchase it outright or use equipment financing? Make sure you calculate the interest rates you pay for equipment financing into your business’s budget.
Step 5: Register Your Business & Get Insurance
To legally register your business, you first have to decide on a business structure. The business structure you choose depends on the amount of liability you are comfortable with and if you plan on hiring employees. Business structures include:
Limited Liability Partnership
Limited Liability Limited Partnership
Limited Liability Company (LLC)
If you are just starting up, and you plan on working independently for a while, a sole proprietorship is a good option. However, if you plan on hiring employees, you should look into setting up an LLC. For more information on the pros and cons of each business structure, try our complete guide to business structures.
The next step is to register your business name. As you choose a name for your business, consider using keywords, such as “delivery,” “same-day delivery,” or even “floral delivery.” That will help your business appear in Google searches. During this step, you should also look into available domain names. Choosing your business name and domain name at the same time can help you create consistent branding and make your site easier to find online.
Your final steps are to register your business with the IRS, register for business licenses and permits, and register with your state’s revenue office. For more information on these steps, see our article, How To Register Your Business: The Complete Guide.
As you set up the legal part of your business, make sure you sign up for any necessary insurance. These insurance plans protect you and your business, and they also protect your employees. Here are some types of insurance you should purchase:
General Liability Insurance: This insurance package covers delivery services and delivered products. This insurance protects companies against lawsuits related to delivery services. Learn more about small business liability insurance.
Commercial Auto Insurance: Commercial auto insurance covers damage or theft done to a fleet of vehicles, an owner’s vehicle used commercially, or an independent contractor’s vehicle. Also, commercial auto insurance covers bodily injury and medical expenses. If your business operates trucks, you may also need commercial truck insurance. Read What Is Commercial Auto Insurance & Do You Need It? for more information.
Garage Liability Insurance: If you plan on storing vehicles on-site, you’ll also need garage liability insurance.
Commercial Property Insurance: To protect your employees’ property (things they store in their vehicle while they are at work), you can also sign up for commercial property insurance.
Workers’ Compensation Insurance: Workers’ compensation insurance is required in most states. This insurance covers medical costs and lost wages for work-related injuries.
Step 6: Create Your Online Presence & Marketing Plan
The next step you should take in starting your business is to create a solid online presence and marketing plan.
Your business’s online presence is the overall impact of your brand’s website, review pages, and social media interactions. Essentially, your online presence is made up of everything your brand has done online. Work to create a strong online presence from the very beginning by building a beautiful and easy-to-navigate website and registering your business with business directories, such as Google My Business and Yelp. For more information on developing an online presence, read How To Build An Online Presence For Your Business In 9 Simple Steps.
Finding & Keeping Customers
As you build up your business’s online presence, you should also consider the ways you will draw customers to your business. Make a plan for acquiring and retaining clients. Will you purchase online advertisements or claim an ad spot on the radio? Will you place ads on billboards or in the local newspaper? Will you partner with local businesses and rely on them for new customers?
No matter what you decide, make sure you have a plan for your marketing approach. And if your attempt doesn’t pan out, adjust your marketing strategy, and try again.
Once you have found customers, do your best to draw them back to your service by giving them a great experience and having quality marketing strategies. We recommend using CRM software to keep track of your former customers and reach out to them again in the future. Learn more about how to retain repeat customers with our article, 11 Ways Businesses Should Be Using CRM Software.
Step 7: Determine Your Rates For Delivery
Your next step is to decide on how much you’ll charge for deliveries. There are a few different ways you can price your services.
Many delivery companies charge on a per-mile basis. Each mile driven costs a set amount. In another model, you can charge a base rate and then add per-mile costs on top of that base rate.
As you set your prices, you should also determine the boundaries in which you will deliver orders. You can choose to not make any deliveries outside of these boundaries or charge a distance surcharge.
Make sure that your prices account for your company’s total overhead (including fuel, vehicle maintenance, time, and other costs) to protect your profit margin.
Step 8: Set Up Payment Processing
As more businesses transition to accepting digital payments, you should also consider what your payment solutions will be. If you choose to accept digital payments (which we recommend), you need to set up a payment processor.
The payment methods that are best for your business depend on who your delivery business serves. If you deliver directly to consumers (and consumers pay upon delivery), you’ll need a good method for accepting credit card payments. A mobile device with a card reader would work well in this instance. A couple of good payment processors that allow you to accept payments this way are Square and Payment Depot Mobile.
If you serve other businesses, however, you should consider alternative payment methods. Businesses that sell B2B can often qualify for lower credit card processing rates, so it might be worth pursuing a processor that caters specifically to B2B companies. On the other hand, ACH (automated clearing house) payments are cheaper overall, and they are a good alternative to credit card payments. For additional guidelines on accepting payments as a B2B business, check out The Complete Guide To B2B Payment Processing: Credit Cards, ACH, Software & More.
Step 9: Manage Expenses For Your Delivery Service
As you operate your business, you should have a plan for how you’ll track and manage expenses.
Use good accounting software to track tax-deductible expenses, such as fuel, repairs, and new equipment. Take a look at our article about tax write-offs for more information.
In addition, you should make a plan for how employees will purchase fuel on the road. Will you give drivers access to the company credit card, or will you reimburse your employees for their gas purchases? Make plans for these expenses before you begin your first delivery.
Is Starting A Delivery Business Right For You?
Does starting your own delivery business still seem right for you? Are you prepared to handle the challenges of planning delivery routes, and are you ready to face the competition of the ever-popular delivery apps?
If you’ve answered yes, we’re here to support you as you begin! Sign up for our newsletter to get up-to-date information on owning and operating a small business. To read more about starting your own business, take a look at these articles:
The ‘How-To’ For One Page Business Plans
8 Ways To Finance Your Small Business
How To Register Your Business: The Complete Guide
Types Of Business Structures: The Complete Guide
How To Build An Online Presence For Your Business In 9 Simple Steps
The Complete Guide To B2B Payment Processing: Credit Cards, ACH, Software & More
The post How To Start A Delivery Business In 9 Easy, Hassle-Free Steps appeared first on Merchant Maverick.
Over the past week, countless individuals across the US have protested police brutality following the death of George Floyd while in custody of the Minneapolis Police Department. These protests, though sparked by the recent tragedy, have roots stemming from decades of civil inequality. Even though many of those demonstrating their First Amendment rights have engaged in peaceful protests, some individuals have reacted violently towards both public and private property.
It is far too soon to calculate the full brunt of the damage caused by violent riots, although initial reports indicate the destruction to be quite extensive. In Minneapolis alone — the heart of the now-national protests — several hundred businesses have been vandalized, looted, or otherwise harmed by fire, broken glass, or water.
Elsewhere, in cities such as Chicago and Los Angeles, business owners have had to plead and negotiate with those looking to damage and loot stores. No matter the exact extent, the total blow to businesses throughout the country is certainly astronomical.
In response to the rioting, some major retailers have backed the protests while downplaying the destruction to their stores. For instance, the department store giant Nordstrom stated in a press release that it can âfix the damage to [its] storesâ while adding that âwindows and merchandise can be replaced.â A few smaller businesses, such as a Bangladeshi-Indian restaurant in Minneapolis that lost its building to a riot-related, have also voiced support for the sometimes aggressive demonstrating.
This damage caused by rioting isn’t unprecedented — past riots in Los Angeles, Detroit, and Miami also caused heavy destruction. In those instances, governments and private organizations stepped up to aid local businesses. Unfortunately, such aid may not always be enough to heal local economic devastation — and especially so for those whose entire livelihood was tied up in businesses destroyed by a riot’s wake.
The History: How Violent Unrest Affects Local Businesses
The United States has had a long and complicated history with public protesting. The Boston Tea Party of 1773 was an organized and targeted protest that opposed the tyrannical reign Britain had over its New World colonies. The women’s suffrage movement picketed, paraded, and participated in other forms of demonstration in the early 20th century, encouraging the acceptance of a woman’s right to vote. Throughout the mid-20th century, civil rights protests helped break down racist laws.
It is not uncommon for violent rioting to accompany protesting, even if most participants are engaging peacefully. And while protesting has been shown as an effective agent of social change, violent forms of protest can inflict substantial economic wounds on local communities.
The 1967 riots in Detroit cost between $40 and $45 million (just over $300 million in today’s money) while the 1992 Los Angeles riots caused as much as $1 billion in damages. Riots born outside of civil unrest can be also pricey — the rioting that ensued after hockey’s Vancouver Canucks won the 2011 Stanley Cup damaged roughly 4 million Canadian dollars worth of property throughout downtown Vancouver.
On top of the immediate impact, it can take years for communities to recover. Five years after the 1992 riots, Los Angeles had an unemployment rate that was about 3 percentage points higher than the national average, based on a 1997 New York Times report. By 2002, the city had lost nearly $4 billion in taxable sales in the decade following the riots, according to a 2004 study published in the Urban Studies journal.
More recently, Ferguson, Mo. — home to rioting in 2014 — continued to have never-returned-to-businesses boarded up as late as 2019. The small city’s unemployment rate also sat at 5.5% in June 2019, which was over 2% higher than the Missouri state average.
Aid might also fail to reach the places that need it the most. For instance, an estimated $40 million in property was damaged during the Los Angeles-area Watts riots of 1965. However, the Small Business Administration only doled out 26 loans worth $400,000 to businesses impacted by those riots.
In the aftermath of the Detroit and Newark, N.J., riots that took place two years later, the SBA was a bit more generous, giving out $3.4 million in aid to affected businesses. Some small business owners still felt slighted, though. Edward Deeb, while representing a Detroit grocers association, argued in a 1968 Senate hearing that “the small businessman feels it unfair that only one side is being told, and that side is based on sensational charges designed to arouse and inflame a community.” Deeb further claimed that businesses in areas hit by rioting were discriminated against — insurance companies deemed these areas “high-risk” and so had increased insurance premiums for business owners.
Following the 1992 Los Angeles riots, some Korean-American business owners struggled with the English-language application forms for the SBA-issued disaster loans. Meanwhile, other owners felt “the system was designed to discourage them,” as a Los Angeles-based advertising executive told the Associated Press. All told, four months after the Los Angeles riots, only 1,400 merchants out of the roughly 10,000 businesses damaged or destroyed had received loan checks; thousands hadn’t gotten anything or simply didn’t complete the application process.
In some cases, other factors doom damaged businesses. According to the Cincinnati Enquirer, 32 of the 70 businesses that received city-made emergency loans defaulted on their loans five years after the 2001 Cincinnati riots. Business owners in the southwestern Ohio city told the paper that “aftershocks of the riots” and increased violent crime and panhandling made people feel unsafe or unwilling to go downtown — ultimately harming many of the local businesses impacted by the rioting.
There are still seeds of hope, however. Some businesses, such as a clothing boutique in Ferguson, are able to survive and thrive after receiving aid money. Additionally, it’s important to remember that the very real and justifiable anger of rioters can help further positive societal change. Those incited by Martin Luther King Jr.’s assassination hastened passage of the 1968 Fair Housing Act.
The Aid: Where Businesses Can Look For Riot Relief
The question of who pays for damage following riots is often a tricky one. Business owners generally have several avenues to pursue: insurance, government aid, and/or private support through loans or donations. Success in these avenues can vary wildly from business to business, however.
Insurance coverage for riot-related damage, in particular, will depend on the business. In some cases where landlords don’t require inventory or equipment insurance, policies may cover very little and business owners may be on the hook for losses and repairs. If you have property insurance, however, you should receive coverage for rioting and civil unrest.
As for government aid, the SBA operates a disaster loan program. In the past, disaster loans have been issued for businesses impacted by rioting, such as those damaged during the 2015 Baltimore riots.
To qualify for a disaster loan, your business will need to be located somewhere the SBA has declared a disaster area. To monitor currently declared disasters, visit the SBA website. At the time of writing, the SBA has yet to declare any disasters relating to the nationwide riots, but that may change as the situation progresses.
In some cases, the federal government has provided other support channels. For example, after the 1992 Los Angeles riots, the government issued a $600 million relief package that was made available for residents, landlords, and business owners through the Federal Home Loan Bank Board system.
Beyond federal assistance, local governments and banks have also been known to step in. The state of California handed out emergency bridge loans following the 1992 riots, while city and county governments proposed emergency loans to businesses after the Cincinnati’s 2001 riots. A special loan program for businesses hurt by those 2001 riots was also made available by a local bank and chamber of commerce.
Other local organizations can also provide aid to hurt businesses — the Ferguson clothing boutique mentioned above received $20,000 from Phi Beta Sigma, a local fraternity. More recently, the Lake Street Council, a Minneapolis-based small business advocate, has raised nearly $4 million in aid money for local businesses ravaged in the recent riots. With similar organizations also chipping in, it may behoove businesses suffering from riot-based damages to seek out non-government funded sources.
Some businesses have also found success using donation platforms like GoFundMe. Examples here include a Minneapolis bar that has already raised over $1 million after its building burned down during the recent riots. Meanwhile, a Vietnamese restaurant in Tampa, Fla., just met its $80,000 donation goal after its location had been ravaged by rioting.
The Wrench: COVID-19
Purely in economic terms, the riots come at a hard time for many small businesses. Scores of businesses have been affected by the economic turmoil churned out by the COVID-19 pandemic. According to a Facebook report, roughly 10% of small businesses surveyed don’t plan to reopen after facing financial struggles due to the coronavirus — a number that may only rise.
Because the SBA has struggled to provide adequate support during the pandemic, we don’t know how the federal government will react once the unrest settles down. It’s possible the SBA will indeed be able to help businesses hurt by the rioting through its disaster loan program. However, with the SBA currently processing record numbers due to businesses struggling from COVID-19, it’s possible that any riot-related relief will take longer than usual to flow out.
State and city governments are also facing economic woes thanks to COVID-19 forcing back tax due dates and dropping overall revenues. This could affect how much monetary aid local governments can provide to businesses in the coming weeks and months. Additionally, more unemployment claims will simply add more stress to already struggling unemployment departments.
The Action: What You Can Do To Help Your Business
We currently live in an unprecedented time where there are no easy answers. Between the looming pandemic and the civil unrest that has gripped the nation, many small businesses will have a difficult time rebuilding in the months and years to come.
If your business has been hit by rioting and looting, we recommend that you first reach out to your insurance provider. If you don’t have adequate coverage, be sure to keep an eye out for SBA action or aid planned by your local governments.
You can also look to local organizations that raise money for small businesses or set up your own donation fund through a service like GoFundMe. If all else fails, we urge you to tell your story to local news organizations or simply by sounding off in the comments below.
The post Small Business Riot Damage Relief: What To Expect & How Your Small Business Might Be Able To Get Assistance appeared first on Merchant Maverick.
The ongoing COVID-19 pandemic has created the worst economic disruption for small business owners in the last 90 years. Even in parts of the country where restrictions are being lifted and businesses are slowly starting to re-open, the need to invest in additional sanitation measures and protective equipment to comply with local and state public health requirements has raised costs at a time when incoming revenue is still drastically reduced. Critically important small business supply chains have been disrupted, further increasing the cost of doing business.
As a small business owner, you may feel that you have no choice but to pass as much of your increased expenditures onto your customers as possible if you want to avoid going out of business. In fact, some owners have already done so, implementing what has come to be called a âCOVID surcharge.â This surcharge is a small amount â either a percentage or a fixed dollar amount â thatâs tacked onto a customerâs bill and specifically designated to cover increased pandemic-related expenses.
In this article, weâll discuss COVID surcharges and why some business owners around the country have implemented them. Weâll go over the likely response youâll get from your customers if you choose this course of action (hint: itâs not positive). Weâll also give you several alternative strategies you can implement that will increase your incoming revenue without the need for a surcharge. Finally, weâll show you how you can use business data (often automatically generated by your POS system) to manage your costs and improve your ability to keep up with the additional pandemic-related expenditures.
Why Some Businesses Are Adding Surcharges During The Coronavirus Pandemic
As weâve alluded to above, COVID surcharges are a direct response to the additional costs required to operate a business safely in the middle of a worldwide pandemic. Protecting your customers and your employees from a highly contagious, potentially deadly disease requires a lot of extra equipment and safety measures that werenât necessary just a few months ago. Disposable gloves, masks, hand sanitizer, extra signage to encourage proper social distancing, regular fumigation of your business â it all adds up to a significant cost at a time when youâre likely to be severely limited in how many customers you can even allow into your shop or restaurant at a time. For businesses that operate on a very thin (e.g., 2-3%) margin in normal times, the cost can be too much to bear while still turning a profit.
So, how have COVID surcharges worked out for the business owners whoâve implemented them? To put it mildly, not very well. While some customers are willing to pay a little extra temporarily to support a favorite local business during hard times, many others have responded with anger and disgust.
Consider the unfortunate case of Kiko Japanese Steakhouse & Sushi Lounge in West Plains, Missouri, which has attracted a lot of attention nationally. Faced with rising COVID-related costs and not wanting to raise prices across the board, the owners decided to implement a 5% surcharge. They went out of their way to explain to customers why they were doing so through social media and signs posted at their restaurant. Despite their best efforts to be transparent about the surcharge, they received a tremendous amount of criticism for it, often from people out of the area who werenât even patrons of their restaurant. They eventually were forced to discontinue the surcharge, and instead raised their prices to cover the extra expenses.
If reading horror stories like this one has you thinking that COVID surcharges are a bad idea, youâre probably right. However, there are some circumstances where they might work. A lot will depend on how your usual clientele has been impacted by the COVID-19 pandemic. If youâre located in a well-off area, and most of your customers are still gainfully employed (either at home or working in an âessentialâ industry), they probably wonât mind paying a little extra to support a favorite business.
On the other hand, if youâre in an area that has experienced a lot of job losses and your customers are struggling, hitting them up with a surcharge is probably not a good idea. You should also take a close look at what your primary competitors are doing. You probably donât want to be the first business in your area to start implementing a surcharge. However, if other businesses are already imposing them and havenât faced a significant backlash, it might be safe to add your own surcharge as well. Overall, we consider COVID surcharges as a last resort that should only be implemented if you have no other way of maintaining profitability and staying in business. Here are some other options you should consider first before implementing a surcharge:
Four Alternative Strategies For Boosting Profit Margins
Businesses that operate on tight margins have always had ways of reducing their costs as much as possible, and many of those tricks might have been effective in ânormalâ times. However, in the face of a worldwide pandemic, youâll need to try some new strategies to keep your costs low and your profits high (or at least, high enough to stay in business). Here are a few things that you might not have considered before that can help you stay afloat until the economy recovers:
Modify Your Menu Items Or Goods That You Sell
If youâre running a restaurant, you already know that some menu items are more popular than others, and some cost more to make than others. By shifting your menu selection to emphasize popular items that have a high per-item profit margin, you can increase your incoming revenue and lower your overall ingredient costs at the same time. If youâre not quite sure how to do this, our restaurant food cost calculator can help you get started.
Of course, this technique isnât limited to restaurants alone. Other types of businesses, especially retail stores, can apply the same principles to help improve their cash flow. We probably donât need to tell you that certain items (e.g., toilet paper, soap, hand sanitizer, face masks, etc.) have become much more popular during the COVID-19 pandemic. Besides these obvious items, weâve seen dramatically increased demand for just about anything related to working from home, including items like office chairs, desks, and even webcams for video conferencing.
Offer A Cash Discount
One strategy for improving profitability that was already gaining in popularity before the pandemic is to shift the costs associated with credit card processing onto your customers. Often advertised as free credit card processing, this technique can be implemented by either adding a surcharge for customers who pay with a credit card or providing a cash discount to those who pay in cash. With surcharging, a small fee to cover the cost of credit card processing is added to the bill if a customer pays with a credit card. With a cash discounting program, your advertised prices will include the cost of credit card processing, and these prices will be discounted at checkout for customers who donât use a credit card.
While the distinction between these two programs may seem very subtle, there are important legal differences between them. Cash discounting is legal everywhere in the United States, but surcharging is currently still prohibited in four states and several US territories. Your merchant account provider can help you set up either of these programs (assuming there are no legal restrictions in your jurisdiction), including providing you with the required signage to notify your customers and reprogramming your terminal or POS system to apply a surcharge or cash discount automatically.
For more details on how these programs work and how to implement them in your business, check out our article, Your Complete Guide To Credit Card Surcharges.
Raise Your Prices
If the previous two strategies donât produce the desired results, it might be time to simply raise your prices. You may have to do this anyway if the prices you have to pay for inventory or raw ingredients go up due to supply chain problems.
We recommend that you implement targeted price increases, focusing on high-demand menu items or products. However, raising your prices across the board by an equal amount can also be effective. Which option is better will depend on a variety of factors, so youâll have to evaluate the unique circumstances of your business to determine the best course of action.
While most of your customers will be (grudgingly) understanding about the need to raise prices in the face of a national emergency, be careful that you donât overdo it. Check your stateâs anti-price gouging laws, if any, to ensure that you donât get yourself in legal trouble. California, for example, makes it illegal to raise prices for basic goods and services by more than 10% above pre-pandemic levels.
Lastly, price increases should be temporary. Make an effort to communicate to your customers that you intend to bring your prices back down once you can resume normal operations without the need for additional protective measures.
Implement Surcharging As A Last Resort
If none of the above strategies â either individually or in combination â prove sufficient to turn things around and your ability to continue to operate is imperiled, you may find that you have no choice but to impose a COVID surcharge. Obviously, youâll want to communicate this to your customers before making the change, and you should also set the surcharge as low as possible. Ideally, it should be just enough to recoup your additional COVID-related expenses. As weâve seen from the real-world examples above, you will probably receive at least some blowback for the surcharge. However, it can still be effective if your actual customers are willing to support it.
We recommend an across-the-board percentage-based surcharge rather than a flat âconvenience fee.â The latter option will disproportionately affect low ticket sizes and could discourage some customers from making a purchase at all. Your merchant account provider can help you reprogram your processing equipment to apply the surcharge automatically. Again, itâs critically important that you communicate with your customers before you start adding a surcharge to their bills, and be sure to discontinue this extra fee as soon as itâs possible to do so.
How To Use Your Business Data To Track The Impact Of Pricing Decisions
Youâll need to be able to gauge how effectively any pricing changes or surcharges are helping (or hurting) your bottom line. Make sure that all additional fees are entered properly into your POS system, and keep accurate notes of when prices were changed or when surcharges were implemented or discontinued. Modern POS systems and online data analytics tools offered by your merchant account provider can prove invaluable in quickly analyzing the effect of any changes you make, and they can gather and analyze the data automatically for you.
You should also determine the effective rate youâre paying for credit card processing. If your effective rate is too high, it might be time to switch to a more affordable merchant account provider. While you might be reluctant to make this kind of significant change in the middle of a pandemic, doing so can potentially save you hundreds of dollars per month in credit card processing expenses. Take a look at our Merchant Account Comparison Chart for an overview of some of the providers who can save you the most money.
Related: Why Point Of Sale Data Is The Secret To Understanding Your Business And Making More Sales
The Bottom Line: The Pandemic Will Affect Your Bottom Line For The Foreseeable Future
If youâve been reading this far, you probably understand that we donât think COVID surcharges are a good idea. They have a very high potential for hurting your online reputation and driving away customers. As weâve shown, there are many other ways to generate the necessary income youâll need to cover your COVID-related expenditures. Modifying your product or menu item lineup, imposing credit card surcharging (or a cash discount), and targeted price increases can all be used to cover these expenses without the need for a COVID surcharge.
For many businesses, switching to a more affordable merchant account provider can be the most effective strategy of all to improve your profitability and cover any additional expenses you incur during the COVID-19 pandemic.
Hopefully, the techniques weâve discussed above can help you get through the current pandemic, especially if the much-anticipated second wave of infection becomes a reality in the near future. Thanks for reading, and good luck!
The post Should You Implement A COVID Surcharge? 4 Ways To Manage Your Profitability During The Pandemic appeared first on Merchant Maverick.
Few businesses have quite the same relationship with their equipment as laundromats. Essentially, your equipment is almost the entire draw of your business. Customers will be regularly paying you to directly utilize your equipment, so it goes without saying that you want to spend a lot of time thinking about your equipment purchases.
If you’re thinking about starting your own laundromat and want to get a sense of how much the equipment will cost, where to buy it, and how to finance it, you’ve come to the right place. Read on for more information.
The Equipment You Need To Start A Laundromat (& How Much It Costs)
If you’ve been to a laundromat, you probably have a general idea of what types of equipment you’ll need to get your laundromat up and running. Nevertheless, let’s lay them all out to make sure we’re on the same page. You’ll need, at a minimum:
Commercial washers ($700 – $25,000 each)
Commercial dryers ($1,000 – $20,000 each)
A payment system
Coin-based ($100 – $200 per machine, $700-$1,200 per bill-to-coin changer)
Card-reader system ($40,000 – $80,000)
Water heating system ($15,000 – $40,000)
You’ll probably want:
Tables for folding ($60 – $600/each)
Seating ($30 and up/each)
Laundry carts ($50 – $80/each)
Vending machines for snacks/detergent ($1,000 – $5,000/each)
This is the reason your customers will come! Commercial washers come in a number of different sizes, with capacity ranging from 1.7 cubic feet to over 4.5 cubic feet. Many laundromats provide different sizes for different loads, charging more for use of the larger machines. In general, top-loaders are cheaper than side-loaders but are less energy and water-efficient. Even so, there’s a pretty enormous range of prices for washing units. For any given model, you want to take into account the long-term costs of the machine in terms of both utilities and maintenance. If you’re aren’t hunting for the absolute cheapest or most expensive models, you can probably expect to pay somewhere between $1,000 and $3,000 per unit.
Most customers who use laundromats will also want to dry their clothes on site. Dryers can be heated by electricity or gas, but the majority of new laundromats will probably opt for electric (typically 240 volts) unless they already have a convenient infrastructure for gas. If you’re short on floor space, you may want to consider stackable dryers, which allow you to double the number of units you can fit within your shop. Expect to pay a bit more for the privilege, however.
Dryers generally have a larger capacity than washers, ranging from 5.5 to over 9 cubic feet, as more space is needed to effectively dry the same amount of clothes. Like washers, you can probably find decent units for between $1,000 to $3,000 each.
A Payment System
The once-ubiquitous coin-operated laundry is a rarer sight than it used to be, but it’s still a viable option for laundromats looking to minimize startup costs. The coin boxes, feeder slides, and wiring add a small amount of expense to each machine. You’ll also need to spring for a bill-to-coin changer or two to ensure that your customers have quarters to feed your machines.
The downsides of a coin-based system come into play down the road. While you won’t exactly be a bank, you’ll have a lot more cash onsite, which means you’ll have more security risks than you would with a card-based system. Those risks can add expense–collecting the coins, transporting them, etc.
A card-based system, on the other hand, offers a lot of long-term conveniences. You won’t have to worry about collecting or keeping track of coins, and your customers won’t have to worry about having cash on hand when they walk in. Even better, these systems make it easier to track your sales. Additionally, they can function a bit like loyalty cards, encouraging customers to come back and spend down the value on their cards. Some systems also allow you to offer perks like dryer credits.
The downside, of course, is that these systems are pricey to install, adding upwards of $40K to your startup expenses. If you can afford it, though, the general consensus seems to be that they’re worth it.
Water Heating System
If you’re offering warm and hot wash cycles, you’ll need a heating system for all that water you’ll be using. These systems come with or without a storage tank. The advantage of the former is that it keeps hot water at the ready for use, but utilizes more energy to do so. Either way, you’ll want to make sure your system is powerful enough to produce enough hot water for all your machines should they run at once. With a tank storage system, you’ll want to consider its recovery rate to make sure it can meet peak demand, whereas with a tankless system your concern should be with the amount of hot water it can produce on demand.
While not necessary per se, there are some other items that will improve your customers’ laundromat experience and help you stand out from the competition.
First, there’s the stuff that helps customers take care of their laundry. I’m talking about carts that make it easier to move wet laundry to dryers, and dry laundry to tables for folding. And speaking of tables, you’ll probably want those too. How about seating for customers who are waiting for their laundry to finish? And maybe a way to buy detergent, fabric softener, or dryer sheets if they didn’t bring their own?
Vending machines are a common sight in laundromats, and for good reason. Your busy, captive clientele are likely to get thirsty or peckish. It’s not unusual for such machines to be a significant source of revenue for laundromats. Vending machine prices vary quite a bit depending on the model and whether you buy new or used, but you’re probably looking at an outlay between $1,000 and $5,000 each.
The final consideration is entertainment. Let’s face it, doing your laundry isn’t the most exciting thing in the world. Sure, many customers have smartphones, but maybe they’d be more comfortable watching TV! How about some toys to occupy kids? And who doesn’t associate laundromats with old-fashioned coin-operated arcade games? While none of these are necessary, they can be difference-makers when people are choosing where to do their laundry.
Where To Purchase Laundromat Equipment
You can purchase laundromat equipment through a number of different sources. The option that’s best for you will likely depend on your budget, your location, and your business plan.
Laundromats are such a common business there are actually quite a few companies that exist primarily to service them. These distributors specialize in selling, servicing, and installing laundry equipment. They also usually deal in parts, which can be useful if you’re trying to keep older machines running. If you decide to use a distributor, make sure they have a good reputation and work with the brands you want to use. If you’re looking to keep costs really low, many distributors also deal in used equipment.
You can also try to buy your equipment directly from the manufacturer. While many brands still work with local distributors to sell their products, some also offer their own financing programs to help customers buy their products. Coincidentally, if you know the brand of equipment you want, you can often use a manufacturer’s website to find distributors in your area.
While they aren’t nationally known like some other industries, there are a number of laundromat franchises operating in the US. Plugging into a franchise usually raises your starting costs. You’ll have to pay a franchise fee upfront, conform to franchise standards, and may have to pay royalties every month. In exchange, you benefit from the franchise’s advertising and supply chains. Keep in mind, a franchise will most likely lock you into specific brands and layouts.
You can, of course, buy equipment from retailers, but unless you’re taking advantage of a great sale or can come to some kind of bulk buying/financing agreement, this probably won’t be the best way to purchase the majority of your laundromat equipment. It may, however, make sense to buy some of your smaller one-off purchases this way.
Laundromat Equipment Financing Options
By now, you’re probably realizing that equipment makes up a lot of the cost of starting a laundromat, with total costs for an average-sized laundromat ranging between $200K – $500K. If you don’t have that much money lying around under your mattress, you’ll need to seek other sources of financing.
If you have decent credit (620+) and would rather have monthly payments rather than a large initial expense, you can lease your laundromat equipment. Leases come in two general forms: capital leases and operating leases. Capital leases are effectively loan substitutes, meaning you’re financing equipment with the intent to own. Operating leases, on the other hand, are rental agreements that allow you to utilize equipment that is technically owned by the leasing company. This can be a useful arrangement if you want to frequently upgrade your machinery. If you’re buying from a manufacturer, see if they offer captive leasing, or are partnered with any equipment leasing companies.
Keep in mind, however, that leasing is almost always more expensive over time than buying.
If you’re looking to buy and can afford a downpayment, a slightly cheaper option than leasing is to get an equipment loan. Equipment loans are secured loans that use the equipment being purchased as collateral. This tends to result in better term lengths and rates than you’d see with a similar unsecured working capital loan.
The Small Business Administration can help new businesses that may not otherwise qualify for competitive loan rates and terms to get them. The two most popular programs, 7(a) and 504, can both be used to purchase equipment. The term lengths offered by these programs can spread the cost of your equipment out over a long period and give your business time to mature. Just be aware that applying for SBA loans is an involved, time-consuming process.
Start Your Laundromat Business Off With The Right Equipment
Remember, a laundromat is itself something of an equipment rental business, with the customer “borrowing” your machines for short intervals to clean your clothes. That means your equipment should be one of the top priorities of your business.
Ready to do some purchasing? Check out our favorite equipment financers. Confused about some of the terminology? Take a look at our breakdown of the differences between equipment loans and leases.
The post Laundromat Equipment Guide: Expected Costs, Where To Purchase, & How To Finance Laundromat Equipment appeared first on Merchant Maverick.
Depending on the circumstance, selling a business can be a devastating, rewarding, or lucrative experience — and sometimes a surprisingly emotional one. In this post, we’ll dig into the hows and what-ifs you’ll want to explore before, during, and through the transitional phases. Understanding the basics and planning can help you avoid falling into some of the common pitfalls that may spring up during the process of a business sale, so let’s get started!
Questions To Ask Yourself Before Selling Your Business
Selling a business can be a lot more complicated than it might seem at first glance. While this post focuses on the practical to-dos of selling your business, let’s start with some open-ended questions that may help you clarify your goals.
Why do you feel it is a good time to sell your business?
What is your time frame?
Do you have flexibility with your time frame (if it meant maximizing profits)?
What do you want for the future of your business? Is retaining certain elements of your business important for you?
Will you use a broker to do the legwork in finding a buyer or do you have the time to invest yourself?
Now that we’ve got you thinking, let’s explore the work you’ll need to do before you sell and how you can sell it wisely.
How To Sell A Business Successfully In 7 Steps
If you’ve made a definitive decision to sell, or you are still in the discovery phase, here are the steps you’ll need to understand if you are to move ahead successfully and get the highest sales point as possible.
1. Preparing An Exit Strategy
If you currently do most things yourself in daily operations, start delegating as many responsibilities as you can so that the buyer sees your business can run smoothly without you. Make no mistake: buyers will look at this aspect closely, and it can make a huge difference in selling your business. A well-oiled machine that doesn’t need too many adjustments will go for a higher price.
Another important component for your exit strategy is a packet of general information about your company, including your origins, media mentions or publicity, company growth, marketing strategies, and general employee information. This information gives your buyer a more complete picture of your business and its trajectory over time.
Of course, if your company operates mostly online, you’ll also want to share statistics, including search engine ranking, keyword ranking, visitor statistics, and demographics, as well as any competitor analysis. Remember, your buyer needs all of this information to make a calculated risk and feel confident in doing so.
2. Getting Financials In Order
Organizing your finances is extremely important. It is probably one of the most important things you can do. After all, your business is just one of the options available to a buyer. If your contracts and documents aren’t in order, if things are unclear, messy, or you’re just not ready, the buyer will move on quickly.
Your buyer will likely present you with a checklist of requested information after they’ve given you a letter of intent (more on that later), so being prepared as early as possible for this will help everything go a lot smoother.
Here are some of the documents you’ll want to start rounding up:
Intellectual property (ensure loose ends with any contractors)
These are all things you can start gathering right now to organize your financial documents and contracts. Not only will you be more confident with prospective buyers, but they’ll also be more confident in the health of your business! In addition, you’ll want to plan for the following:
Most states require a documented shareholder meeting if applicable.
Get any undocumented agreements (e.g., equity sharing) settled.
Go through your financials and tax statements with a CPA or accountant so that things are categorized properly and compliant.
Going through your financial and tax statements with a CPA or accountant may help you spot areas in your business that you want to adjust the next year or two to maximize profits. When you are looking at what sorts of expenses you list on your business taxes, for instance, you may decide that an ancillary expense is hurting rather than helping your profit margins, and opt to adjust one or more items in the next fiscal year. If your business is large enough, these changes might make a significant impact on your business valuation. That’s why if you can, pushing your target sale date down the line a year or two may end up paying off for you when it comes time to sell.
3. Obtaining A Business Valuation
Much like when buying a home, the appraisal process is an important aspect of selling a business. An accurate business valuation is critical because it brings credibility to your asking price. When it comes to your business valuation, not all types of businesses are the same; the selling price of your business may vary widely depending on the industry and current trends during any given year, as well as projected growth.
And of course, the higher your profits, the more valuable you’ll likely be to a buyer. This is another reason why you may want to go back and consider what expenses you deduct on your taxes, as those expenses count against your profits in that regard. If you are planning to sell in the next year or more, be aware of the long game and choose carefully what expenses you take on — and how you categorize them.
4. Finding Buyers
If you haven’t already been approached to sell, now it’s time for what may be a challenging phase: Finding a buyer!
You’ll want to spread the word to your colleagues and acquaintances, as well as advertise to target a broader audience of small business owners or interested parties. Or you may want to keep everything confidential. In that case, a broker is a vital player in moving ahead.
If your efforts to sell your business yourself don’t become fruitful for you, it may be time to think about finding a broker. Sure, they will take a cut of the final purchase price, but they may be able to vet out better buyers for you. Not to mention, they will be focused on getting the highest asking price possible because it means a better commission for them! Because a qualified and experienced broker could help you save a lot of time and maximize profits, it may be wise to start looking for one even if you’re not quite ready yet.
Making Your Business More Desirable To Buyers
Having all of your ducks in a row — via impeccable document organization and accurate valuation — will make your business more attractive as people start gaining interest and checking you out as a prospect. Remember, your potential buyers are looking for the lowest risk and highest reward, of course, but the information you bring to the table can be a huge deciding factor in closing the deal.
Once you’ve hooked an interested party, we recommend you pre-qualify your potential buyer. In doing this, your company enjoys a bit more protection because then you’ll only discuss the particulars of your business with serious buyers who have provided some background financial information about themselves. From a buyer’s perspective, a pre-qualification can also encourage them to become more invested in moving through to the next phase.
5. Conducting Due Diligence
If you have found a potential buyer, fantastic! Now it’s their responsibility to really take a look under the hood and find out more about your business. After they give you a letter of intent, they’ll also probably hand you a laundry list of items for you to retrieve. Again, we go back to our own due diligence from the beginning when it comes to keeping clean books and an organized back office.
For larger deals, this process can take months, and that’s why it is so important for you to have a unified front so that it goes smoothly as possible.
Before the deal is finalized, you’ll likely have some very probing questions to answer about your business. Depending on how familiar your buyer is with your industry, you may field high-level questions focused on your company and employee culture, all the way down to the nitty-gritty analysis of the financial and tax documents you’ve prepared for them.
6. Finalizing The Deal
As the deal becomes finalized, now is the time to prepare and communicate with employees about the leadership change.
Many business owners find that the whole process is quite a bit more work than they anticipated, and have already brought a broker on board. If that’s the case, the pressure is mostly off of you to tie up all the loose ends. If not, having an attorney handle finalizing the contracts is probably the wisest decision, as they may be able to catch blind spots you missed and provide greater protection to your business.
7. Preparing To Hand Off Your Business
While all of your energy was probably focused on getting the deal finalized, don’t forget to keep the post-sale transition period in mind. Some buyers want the seller to stick around for an adjustment period (sometimes a few months). Whatever the expectations are, make sure you have those settled and clarified.
A Word About Your Merchant Account
To hand off your business, you’ll have to work out all of those minor (and major) details regarding transferring ownership, too. You’ll need to contact your merchant services provider, for instance, to learn what the protocol is when it comes time to transfer leases, contracts, and any equipment related to your payment processing services.
If you’re stuck in a long-term contract with your payment processor, you’ll have to fill out a change in ownership request formÂ to change the legal entity on the contract with your merchant account. How smooth and flexible this process goes for you largely depends on the flexibility of your contract (if you’re bound by one) and the company with which you work.
Wondering if your merchant account has an early termination fee or a binding agreement? Check out Does Your Merchant Account Have An Early Termination Fee?Â as well as Does Your Merchant Have An Auto-Renewal Clause?Â We show you how to avoid some of the major pitfalls when it comes to contracts, but there are plenty of other options we discuss in both posts to help you avoid this frustrating issue to begin with!
Selling A Business: A Step-By-Step Checklist
Here is another quick recap of the main points we dug into above. You’ll want to keep these in mind as you plan your exit strategy and move towards a successful closing:
Establish a desired time-frame for the sale.
Define your personal goals in selling your business.
Delegate responsibilities and tasks to employees and managers.
Organize contracts and financial documents, and ensure everything is in writing (no verbal agreements).
Get a business valuation.
Spread the word about your sale or find a broker to do the legwork and networking for you.
Pre-qualify your interested buyer.
Allow for due diligence with your buyer and provide documentation as requested.
Have a lawyer or attorney assist in finalizing the sale.
Tie up loose ends with contracts (e.g., your merchant account and/or equipment leases).
The Bottom Line? Selling A Business Requires Organization & Motivation
Starting your exit strategy with these general tasks may seem tedious at the time, yet they represent some of the higher priorities for buyers. Remember, a buyer is a human and as such, they’ll likely apply gut instinct and emotion as well as careful scrutiny when it comes time to make a decision. The truth is that buyers are looking for what feels right and represents the least amount of risk, and yours isn’t the only business they have to choose from. That means that getting your papers organized and in shipshape, having confidence in your “why,” and understanding the process are absolutely critical to successfully selling your business.
For more resources that may help you get things in order before you sell your business, check out Best Accounting Software For Accountants and CPA VS Accountant: Which Do You Need For Your Business?
The post How To Sell Your Business: The Complete Guide To Selling A Company In 7 Simple Steps appeared first on Merchant Maverick.
As the COVID-19 pandemic shuttered businesses around the country, the Paycheck Protection Program, or PPP, was created by the passage of the CARES Act in late March. The goal of the PPP is to provide struggling businesses with forgivable loans to be used on operational costs, starting with payroll. Unfortunately, the initial $349 billion in funding authorized for the program was exhausted in just under two weeks due to overwhelming demand. When another $310 billion in funding for PPP loans was passed on April 24, it was feared that this second round of funding would be depleted just as quickly as was the first round.
However, in a webinar hosted by iHeartRadio on May 21st, the SBA confirmed recent reports that the PPP program still has over $100 billion in funding left to distribute. If your business has been suffering from the effects of COVID-19, you may still be able to get a PPP loan if you apply soon.
In addition to the above, the SBA released the following clarifications in its May 21 webinar:
Per the PPP Interim Final Rule, funding is on a first-come, first-serve basis; lenders should not hold or delay applications
Applications are approved by the lender, which sends them to the SBA for verification
If you applied before Phase 2 (before April 27), check with your lender to see if your application went into the SBA’s system
If you applied in Phase 2 (on or after April 27), confirm your lender has all it needs to submit your application to the SBA
A lender has up to 10 days after the SBA verifies the PPP loan for the disbursement
Upon receipt, consider using a separate bank account to track expenditures for forgiveness
Let’s talk more about the PPP program and the issues it’s had thus far.
Why Businesses Arenât Applying For The PPP
Many businesses have refrained from applying for PPP loans thus far. For some businesses, the reason is simple: they haven’t needed the funding. Other businesses have been deterred from applying by uncertainty surrounding the forgiveness rules — we’ll get into that in a moment.
Other business owners may have a need for additional capital due to the virus but may not be aware that a second round of funding for the PPP program was passed. Still others may have been discouraged by widespread reports of problems encountered by those who have applied for PPP funds. While these problems have been very real for the businesses affected, over $500 billion in funding has been distributed through the PPP thus far. Even accounting for the fact that some of this funding has unfortunately gone to healthy and/or politically-connected entities, that’s a significant transfer of money to PPP loan applicants.
Thankfully, if you apply soon, your business may still receive some of the money that remains in the funding pool.
Are Forgiveness Rules Going To Change?
As I mentioned, uncertainty regarding the conditions by which PPP loans can be forgiven has been a significant deterrent to businesses that may otherwise qualify for PPP funds. Additionally, some business owners have feared that they may face penalties or other legal consequences if an audit by the SBA concludes that they didn’t meet the threshold for “needing” the loan. However, on May 13th, it was announced that business owners with loans under $2 million will not face additional scrutiny by the SBA regarding their need for PPP funds and will not face penalties.
However, even if businesses won’t face the possibility of penalties for “unnecessarily” receiving a PPP loan under $2 million, you still need to use the money as laid out by the SBA’s rules in order to have your loan forgiven. To that end, bipartisan legislation has been proposed that would, if enacted, relax the forgiveness requirements by doing the following:
Let PPP borrowers use the money on payrolls for more than the eight weeks specified under the original program
Relax a requirement that 75% of the loans be used for payroll expenses
Give PPP borrowers more than two years to pay back any portion of the loan that doesn’t get forgiven
Allow businesses receiving PPP loans to receive a payroll tax deferment
This legislation — known as The Paycheck Protection Flexibility Act — has not yet been passed, but its broad support in Congress makes its eventual passage relatively likely.
Should Your Small Business Apply For The PPP?
Essentially, if your business has suffered due to the coronavirus pandemic and you could use funding to cover payroll and other business expenses, you should apply for a PPP loan ASAP.
I’m sure it’s discouraging to hear about people getting the runaround after applying for a PPP loan. Many business owners have written to us about their Kafkaesque difficulties in getting these needed funds. Simply put, the federal government has let down countless business owners at the worst possible time. Nonetheless, over $500 billion in PPP funding has been distributed so far, and over $100 billion remains. Apply now, and you’ll still have a shot at getting a PPP loan.
Learn More About The Paycheck Protection Program
If you’re thinking of applying but want to know more about the Paycheck Protection Program, how to apply, and how to ultimately have your loan forgiven, Merchant Maverick has a number of PPP-related resources to help you.
Start with SBA PPP Loans Explained for an overview of how the program works, who qualifies, and where to apply.
Then, check out How To Apply For A PPP Loan for information on taking the next step.
Read our article Your Guide To PPP Forgiveness Rules for more on how to have your PPP loan forgiven.
For more on how to get your business through the crisis at hand, check out ourÂ COVID-19 hub for all the latest developments. We’ve been updating it continuously to give you the most up-to-date guidance and resources possible.
The post There Is Still Over $100B Left In PPP Funding: Should Your Small Business Apply? appeared first on Merchant Maverick.
In much of the US, small businesses have been given the green light to reopen after several weeks of closure due to the COVID-19 pandemic. But with new cases and deaths still rising and no vaccine on the immediate horizon, experts warn that the coronavirus will likely be with us for some time. Though some types of businesses may be able to implement adequate provisions for social distancing, it is feared that the loosening of social distancing restrictions throughout the country could result in another wave of cases.
There’s still so much we don’t know about the novel coronavirus, but we know a lot more than we did a few months ago. Every day, we are learning more about how businesses can safely reopen, and how they can pivot to stay profitable in these new times. As the weeks go on, we’ll also learn more about what’s not safe and what does not work. In this post, we’ll take a look at some precautions you can take to prepare your business for a possible second wave of COVID-19.
Why The Second Wave Of The Coronavirus Could Be Harder Than The First
You’ve probably heard a lot about the coronavirus possibly being in our lives for 18-24 months. The reason is that this is the amount of time it could take for us to either a) develop a vaccine or b) develop herd immunity against the virus. But what exact course the virus will take in those 18 months to two years is unknown.
A new report from the Center for Infectious Disease Research and Policy (CIDRAP) presents three possible scenarios for the coronavirus, which are based on what scientists know about COVID-19 as well as historical pandemics. Scenario 1 is that after the spring 2020 wave subsides, we get that big dreaded “second wave” we hear so much about this fall or winter, with some smaller waves occurring periodically thereafter. In that scenario, which emulates the 1918-1919 Spanish flu pandemic, the second wave is even bigger and deadlier than the first. This model also reflects the warning from CDC director Robert Redfield, who cautioned that a second wave of the coronavirus in fall or winter could potentially be even more devastating than the first, partly because it will coincide with flu season.
Another scenario presented in the report is that after spring 2020, we’ll see a series of peaks and valleys of the virus over a one- to two-year period, varying by geographic region. CIDRAP says that, depending on the height of the wave peaks, this scenario could require “periodic reinstitution and subsequent relaxation of mitigation measures over the next 1 to 2 years.”
The third scenario posited by CIDRAP is that we’ll see more of a “slow burn” with ongoing low levels of transmission but no major spikes. While this hasn’t happened in past pandemics, the scientists say it remains a possibility for SARS-CoV-2 and one which likely would not require reinstitution of stay-at-home orders or strict social distancing measures.
So it’s pretty clear to see how second waves, third waves, and so forth, will impact businesses and potentially require new lockdowns restricting business activity. While we can be cautiously optimistic that the worst-case scenarios won’t come true, we also need to be prepared for the possibility of a second wave of the virus that could result in more business restrictions and lockdowns.
It’s also a sad reality that even if the second wave is less severe from a health perspective, the economic toll of another prolonged closure (partial or otherwise) could be the final nail in the coffin for many small businesses still trying to recover from the economic effects of the first closure.
Is It Safe To Reopen Yet?
With no national quarantine or coronavirus-related business restrictions in place, states are each making their own decisions about reopening businesses. Individual counties and cities have their own business restrictions as well, with some cities and counties requiring masks at places of business and others having no such requirement. As both the pandemic and the recession continue to deepen, there’s a lot of discussion about how to balance economic health and public health, and also whether local governments are being too hasty about reopening businesses.
When you look at what businesses are doing now, there is a lot of variance from one region to the next, with some states, such as California, maintaining stricter social distancing protocols. For instance, California restaurants can offer takeout and delivery but not dine-in service. California is also doing some phased reopening — such as allowing curbside pickup for retail — in response to effective curve-flattening measures that have slowed the growth of new cases and deaths. Higher-risk businesses that require close contact with other people, including salons, barbers, gyms, and theaters, remain closed.
Meanwhile, in states such as Tennessee, dine-in restaurants are already open, as are salons and gyms. Tennessee is also lifting the 50% capacity restrictions on retail and restaurants, effective May 22. The state is even allowing large attractions, such as theaters, amusement parks, water parks, museums, and auditoriums, to reopen, also on May 22.
So, sticking with those two examples, are Tennessee businesses jumping the gun on reopening, even inviting a second wave? While California does have more than four times as many cases as Tennessee, the share of the population that’s infected is actually higher in Tennessee — one in 391 in Tennessee and one in 489 in California, according to New York Times data.
While time will tell the true impact of business reopenings during the pandemic, based on what immunologists tell us about where you are most likely to be infected by COVID-19 — indoor spaces with lots of people — it’s easy to see how even a single transmission event in a crowded gym or restaurant could cause a local outbreak and resulting business closures.
Again, some types of businesses may be able to reopen a lot more safely than others. It’s possible that, given the right circumstances, even higher-risk businesses such as salons may be able to safely reopen with stepped-up health and safety measures. It will be largely up to business owners (and their local governments) to decide if and how they can safely reopen, but generally, the better safety measures you can put in place, the better protected your business will be against a second wave of the coronavirus.
8 Things You Need To Do To Prepare Your Business
What do business owners need to do to get ready for future outbreaks? What should you have learned, and what should you be prepared to do the second time around? Let’s look at some specific things business owners can do to prepare for another wave of COVID-19.
Invest In Safety
Both to reassure customers and prevent your business from being a source of infection, it’s essential that you step up the health and safety policies of your store or restaurant. Whether that means investing in better personal protective equipment for your staff, putting up signs to encourage social distancing, or improving your building’s ventilation system, you can’t go wrong with a cleaner, healthier business. While most businesses have already implemented some enhanced safety measures, it’s likely you still have some room for improvement, especially if you initially implemented safety measures made for short-term/temporary use.
If you’ve received an EIDL or PPP loan from the SBA, you might consider spending some of it on safety-related supplies, such as PPE, or enhanced sick leave for your staff to discourage them from coming into work sick. (Note that you can only spend 25% of a PPP on non-payroll expenses.)
Revisit Staffing Plans
As businesses reopen, they are having to reevaluate their staffing needs going forward. In some cases, businesses have received PPP funds, but their employees don’t want to come back; other businesses are shutting their doors for good because their loan still hasn’t come through. As the crisis drags on, it’s necessary to view staffing with a long-term view and consideration of what you will do if a second wave forces you to close again. For example, if you’re currently seeing an uptick in demand after reopening, do you need more staff urgently, or can you wait to hire till later to avoid laying people off in the event of another closure?
A POS with employee management can help you make smart scheduling decisions. It’s also a good idea to communicate openly with your employees about your staffing plans because they are probably just as anxious as you about what will happen.
Work On Your Online Presence
If it wasn’t clear already, the pandemic has shown us that having an online presence is an essential tool for communicating with customers about changes to your hours, policies, and other crucial information customers need. Before visiting a business these days, we are more likely than ever to check the business’s website or Yelp profile — we want to make sure they’re still open, and in what capacity. Ahead of a possible second wave, it’s absolutely necessary to get in the habit of routinely updating your website and social media profiles with your current information. You can also use your website and social media for marketing, including offering special online sales during a closure.
If you don’t have a website for your business, you may be able to set one up through your POS — for example, Square POS lets you set up a basic website in minutes. You can also use a website builder to set up a professional website; read Best Website Builders For Small Businesses to learn about options.
Set Up eCommerce Sales
Small business websites have also become an increasingly vital sales channel during the coronavirus pandemic, as eCommerce = socially distanced commerce. If your business doesn’t have eCommerce options, it’s time to set them up. Depending on your business model and industry, you may want to implement the following eCommerce options:
Online Ordering/Local Delivery: Customers can order items or food from your website and have the items shipped or delivered to their homes.
Curbside Pickup/Order Ahead: Customers order from your website and then visit your store to pick them up without having to go inside.
QR Code Shopping: Customers can scan an item’s QR code in your store or store window and then buy the item online.
Online Gift Cards: Customers can buy digital or physical gift cards from your website and spend them on your website or in your store at a later date.
Contactless Payments: This is more of a POS option that can allow for socially distanced payments, but adding a digital payment option, such as Apple Pay,Â can also add another convenient option for customers to pay on your website with one click.
Social Media Selling: Even if you don’t have a full-on eCommerce website, you can sell products and services on social media. Multichannel POS systems, such as Shopify, make it easy to sell on social media, and Square also has a new Square Online Checkout payment option that makes it easy for customers to buy straight from your social media page.
Gather Important Paperwork In One Place
Being organized is key when applying for financing or any kind of aid. If you need a second round of emergency loans, speed will be essential. Make sure you keep all your important paperwork in one place, so you can access it when you need it. If you have received a PPP loan, you’ll also need to keep good documentation practices for when it comes time to apply for PPP forgiveness or if you are unlucky enough to face a PPP audit.
Look At Sales Data
When you need to pare-down operations (reduced business hours, limited customer capacity, online-only, etc.), you need to be super-strategic about what you sell. To this end, your point of sale system should have a wealth of POS data about when you were busiest, what sold well, slow-selling items, etc. You can leverage that data to do things, such as raise prices on hot sellers, lower food costs on a higher-cost dish (for restaurants), adjust your hours and staffing based on your busiest times, and much more.
Small businesses that can use data wisely to adapt quickly are in the best position to survive a second wave of the coronavirus and even a prolonged economic downturn. If you do not have a modern cloud POS with good reporting and analytics, now might be the time to upgrade. Check out our top POS software comparison to look at some of your best options.
Prepare For Shortages & Price Fluctuations
The pandemic has drastically affected the global supply chain, and it is very likely that your business could see shortages of products, supplies, ingredients, or raw materials. Even if you can get the items you need for your business, you may have to deal with price increases. These shortages and resulting price increases could be exacerbated by future waves of the virus, even if your immediate region is not affected. For example, restaurants are now seeing meat shortages and higher meat prices due to outbreaks at meat-processing plants.
In some cases, however, you might get lucky and see price decreases for some supplies, due to decreased demand and possible deflation. For example, gas prices tumbled during the early days of the pandemic. Overall, US producer prices posted their largest annual drop in five years in April 2020. The downside to falling prices is that customers will expect lower prices as well.
For more insight into the supply chain and COVID-19, read Why Small Business Owners Need To Understand Supply Chain & Risk Mitigation: COVID-19 Edition.
During times of uncertainty, it’s important to keep a close eye on your business finances and your cash flow in particular. Crunch your numbers and project your future earnings under different scenarios. If you’re facing another closure, how could your cash flow be affected? What about debts? If you’re not used to making these sorts of calculations, it might be a good idea to employ the services of a financial advisor who can offer a cash flow analysis and give you sound advice about how to handle your business’s finances in the current climate. Accounting software can also help.
15 Resources To Help You Weather Another Wave Of COVID-19
Here is a list of resources you can use to adapt your business to the new times we’re living through. Use these resources to learn more about socially distanced selling, emergency financing, and software that can help you sell smarter during COVID-19.
Take Advantage Of These Small Business Grants For Coronavirus Relief: Find out if your coronavirus-affected small business is eligible for a COVID-19 relief grant from an organization, such as Facebook, Amazon, Spanx, or others.
5 Clever Marketing Tactics For Small Businesses During The Coronavirus Pandemic: Keeping in touch with customers is even more important as businesses temporarily close or switch to online and delivery. Here are five marketing tactics to help.
Social Distancing For Small Business: How You Can Adapt & Survive The Coronavirus:Â Social distancing can help contain the COVID-19 pandemic, but it has hit small businesses hard. Your business can weather the storm by getting creative.
Coronavirus Payments Guide: Everything You Need To Know About Switching To Online & Phone Payments: This article has everything you need to know about accepting payments online and over the phone instead of in-person.
Quick Business Loans: The 6 Best Lenders & 10 Tips For Fast Approval:Â Looking for fast cash for your business? Read this one for a look at six reputable lenders that provide quick business loans and fast approval.
What The Coronavirus Means For eCommerce & What Your Business Can Do About It:Â What does the coronavirus mean for eCommerce business? Learn the top eCommerce trends and how your small business can leverage them.
Everything You Need To Know About NFC Technology & Why NFC Payments Are The Future:Â Are you ready for the future of payments? Business owners should learn how NFC works and adopt contactless to protect customers — and yourself.
The Business Owner’s Retail Guide To Surviving The Coronavirus:Â Are you a small business retailer worried about the state of your business? Check the top tips and resources to keep your business strong during COVID-19.
Coronavirus Survival Guide For Restaurants:Â Learn how your restaurant business can adapt to new business conditions in the age of coronavirus, including resources on how you can save your business from closing and continue serving customers during this crisis.
5 POS Systems With Exceptional eCommerce Integrations For Online Sellers:Â eCommerce sales are growing, but retail stores arenât going away any time soon. Get the best of both worlds with these great eCommerce-friendly POS systems.
Restaurant Delivery Guide: Everything You Need To Know About Implementing In-House Delivery: Considering expanding your restaurantâs services to include delivery? Hereâs what you need to know to implement restaurant delivery successfully.
What Is Square Online Checkout? Your Guide To Using This New Square Payment Option:Â Square just launched a brand new payment service called Square Online Checkout. Learn about this online payment option and how it can help businesses in the age of coronavirus.
Why Point Of Sale Data Is The Secret To Understanding Your Business And Making More Sales:Â Your small business is sitting on a gold mine of information locked away in your POS system. Learn how to use that point of sale data to your benefit.
Easy Accounting Software For Small Businesses: Find easy accounting software for your business no matter what your level of accounting experience is. These top seven choices are easy to learn, set up, and use.
Employee Management With A POS System: The Secret To Simplified Timekeeping, Scheduling, & Reporting:Â Your POS system probably has employee management features that can make timekeeping and scheduling much easier. Hereâs how to make the most of these tools.
The Bottom Line: Your Business Isnât In The Clear Yet
We are starting to see some signs of small business recovery, and that’s a great thing. But business owners must stay vigilant and be prepared for the very real possibility of more pandemic-related business disruptions in the near future.
It can be difficult to plan for the future when you’re still working through the first wave, and there is still so much uncertainty. You might also have the thought that you don’t want to over-prepare for something that might not happen (at least, not in your local area). But the fact of the matter is that even before the pandemic, businesses were moving in the direction of eCommerce, contactless payments, online ordering, cloud POS, etc. The pandemic only accelerated the changes that were already in motion. Also, even after COVID-19 is over, customers will likely remain more mindful of health and safety and will continue some socially distanced shopping practices that they relied on during the pandemic (e.g., curbside pickup). So even if you get lucky and don’t have to deal with a resurgence of this particular virus, your business will benefit from adapting to modern sales technologies, safer health practices, and data-driven ways of making business decisions.
For more information on COVID-19 and small businesses, be sure to check out our Coronavirus (COVID-19) Guides & Resources.
The post Is Your Business Ready For A Second Wave Of COVID-19? appeared first on Merchant Maverick.
Social distancing has become the new normal in the wake of COVID-19, and business travel has unsurprisingly been limited in the recent days and months. However, with states slowly beginning to relax restrictions and businesses struggling to make a buck, the desire to return to usual work travel is understandably becoming more common.
Despite the easing of restrictions, COVID-19 itself isn’t easing up anytime soon. As such, it’s normal to pause before booking your business’s next flight out or scheduling a meeting in another state. Putting your employees in harm’s way is never an easy decision.
So should you or your employees travel for work? And if business travel is necessary, how can you venture out safely? These certainly aren’t simple questions to answer, but we’ve taken a crack at providing clarity so you can have a sense of how to handle the current situation.
Read on for more information on business travel during the COVID-19 pandemic.
Work Travel Will Return As Quarantine Restrictions Are Lifted
COVID-19 drastically shut down the US through local government-imposed stay-at-home orders. Besides affecting local businesses operating out brick-and-mortar locations, these stay-at-home orders also curbed business travel. An April survey by the Global Business Travel Association, a trade organization for corporate travel managers, found that 92% of the nearly 1,000 company members queried had halted domestic travel in face of the pandemic. Numerous industry conferences have been canceled as well, while large companies like Google and Square have placed restrictions on employee travel.
This stoppage in business travel certainly helped provide a hit to the travel industry — data-hoarding company Statista forecasted 470 million business trips by US travelers in 2019. With such a big role in the travel economy, a lack of business travel has played a role in the danger that now faces airline companies, with many eyeing October 1 as a potential date for massive layoffs in the air industry. Meanwhile, a recent study by Facebook reveals that 43% of hotels, cafes, and restaurants have closed down since February. The past several months have certainly been a bleak time for both the travel industry and businesses that rely on frequent travel.
It’s not all economic gloom and doom, though, as restrictions are being eased across the US, potentially sparking an uptick in business travel. According to The New York Times, only four states are still shut down as of May 20. 36 are nearly “universally” reopening while 10 are regionally opening. With restrictions lifted on retail stores, restaurants, and forms of outdoor recreation, more and more travelers will be willing to hit the road.
The numbers support this — at least in airports, which have been getting busier throughout May. During the midst of heavy quarantine restrictions in mid-April, TSA saw as few as 87K travelers go through security checkpoints in a day throughout the US. In May, TSA has now had multiple days of at least 250K travelers venturing through checkpoints. While 250K isn’t anywhere close to the 2 million-plus who went through checkpoints daily this time last year, it’s still a substantial boost from the lows in April.
So even though things may still be restricted in some way, people are now able to go out and about more often — and travel numbers are ticking up as a response. It’s reasonable to then assume that business travel will only become more frequent as more of the economy opens up.
What The Law Says About Travel
Because countries and states all have different regulations and guidelines regarding travel during the COVID-19 crisis, it’s hard to make a sweeping statement about the legality of travel at this time.
We do know that travel abroad will remain difficult for the foreseeable future. For instance, many countries across the globe have locked down their borders to foreigners or require two-week quarantines for incoming travelers. Some international travel destinations are looking more promising for the summer, though, with countries such as Belgium, Greece, and Iceland planning to ease restrictions as soon as June and July.
It is a bit easier to travel domestically within the US. However, some states — such as Alaska, Maine, and Texas — have instituted 14-day quarantine requirements for out-of-state travelers. If you plan for business travel to such states, your options may be limited.
Of course, many states are in the process of easing restrictions — making the precise rules a fast-paced and ever-changing beast. As such, we suggest you hunt down the guidelines for the state or states your business intends to travel to before actually booking any flights or hotels.
All told, the CDC recommends that people stay home as much as possible and that all non-essential travel is curtailed — including both domestic and international. While it is unlikely for you to be arrested for traveling, the CDC does have the ability to detain, detain, medically examine, and release those who arrived into the US or traveled between states and are suspected of carrying communicable diseases under 42 Code of Federal Regulations parts 70 and 71.
You may also want to consider the legal ramifications in case an employee gets COVID-19 while on the road traveling. Since these are unprecedented times, it’s unclear if businesses will face any sort of legal woes for requiring employees to travel for work.
However, a New York Times article on professional conferences does note that “some attorneys are concerned” that if a business sends an employee to a conference and that employee contracts the virus, the liability may be saddled on the business. Because of these murky waters, we advise that you consult a legal professional, if possible, before sending employees on trips.
Tips & Precautions For Essential Travel
The CDC has provided guidelines to determine essential travel within the US. If you do consider your business’s travel essential based on the CDC’s guidelines, there are a few ways you can improve the safety of both your employees and the communities they’ll visit. Here are our tips for businesses with essential travel:
1. Avoid Hot Spots
Limit or fully eliminate travel to areas (such as specific counties or cities) that are seeing recent COVID-19 outbreaks. Because these areas — commonly referred to as “hot spots” — are seeing increased numbers, you or your employees may be at greater risk to contract the virus by traveling there.
One example of a hot spot location is Illinois — and specifically Chicago. Illinois saw over 4,000 positive tests — a peak for the state — as recently as May 12, per NPR. Cook County, where the heart of Chicago is located, has been hit particularly hard, with one in 81 of the county’s population testing positive for the virus as of May 20. Another example hot spot includes Worcester, Massachusetts, which recently saw 81 workers at a local Walmart test positive for COVID-19, according to the Boston Globe.
The New York Times has created a coronavirus map that details hot spots throughout the country. You can also view raw COVID-19 numbers broken down by state over on IHME’s healthdata.org.
2. No Travel For Those With Symptoms
Institute a policy that no employee should travel if they have any symptoms of COVID-19. Besides potentially limiting the spread of the virus, doing so could ease stress on your employees — especially if their symptoms worsen.
According to the CDC, the most common symptoms of COVID-19 include:
Short of breath or difficulty breathing
New taste or smell loss
3. Encourage Safe Travel
Because not all carriers of COVID-19 exhibit symptoms, it’s important that travelers wear a cloth face covering while in public. Also note that for the time being, many major airline carriers are requiring fliers to wear face masks on the airplane. With this in mind, if your business requires air travel, a mask may simply be a necessity for you or your employees to even get on a plane.
Additionally, urge that your employee travelers engage in frequent hand washing, don’t touch their eyes and face, and maintain proper social distancing where possible. Hands should be washed with soap and water for at least 20 seconds while individuals should physically keep six feet apart. If soap and water aren’t available, hand sanitizer of at least 60% alcohol can be used as a substitute.
If it is financially feasible, consider giving masks and hand sanitizer to your employees who travel. Besides building goodwill with your team, doing so can also help encourage that the proper safety protocols are followed by your business’ travelers.
4. Have Employees Self-Quarantine After Trips
When an employee travels in the coming weeks and months, consider requiring that they self-quarantine after returning home. Per the CDC’s guidelines, symptoms take between two and 14 days before appearing. Because of this, we recommend that when possible, you require employees to stay home for two weeks after returning from a trip. You should especially require 14-day quarantines for employees who have traveled to and from coronavirus hot spots.
This rule should be followed for both work and personal travel. In fact, it may be wise for your business to log any time an employee travels, whether for work or personal reasons. Doing so will enable your business to know who should stay in self-quarantine for two weeks.
5. Create A COVID-19 Travel Policy
Having a company policy outlined for travel during the pandemic can ease confusion as employees make plans for the coming months. It should be simple and to the point — make it no longer than one page. It should answer basic questions such as:
“Who can travel?”
“What reasons for travel are essential?”
“How can we minimize risk during travel?”
If you have access to legal counsel or employ human resource specialists, we recommend working with them to come up with a policy that fits your business and your employees.
6. Be Flexible
When you get down to it, your business is made up of people. It’s important to listen to those people and be flexible if they can’t or don’t want to travel during the pandemic.
For instance, if an employee lives with someone who is immunocompromised or otherwise part of an at-risk group, it may be unwise for that employee to be traveling and interacting with many people outside the home. Instead, try to figure out a way that employee could do their tasks from home.
Alternatives To Consider Before Traveling
Until restrictions are fully lifted, and we can safely travel without any worry of contracting or spreading COVID-19, we recommend that you do your best to avoid business travel. Here are a few ways you can still do business without setting foot on an airplane or hitting the road:
1. Work From Home
As a remote company since inception, we at Merchant Maverick have plenty of experience working from home. Working from home can allow employees to enjoy more flexible hours as well as saving money (and time) on commuting. Some employees may find it easier to concentrate in a non-office setting, too.
If it’s at all possible, make sure that your employees that can work from home are doing so. This can limit any potential spread of the virus in your community — and especially so if some employees will also be needing to travel.
While working from home can seem like a daunting task, research has indicated that working from home may actually boost productivity and worker concentration. This has helped convince numerous businesses to be more open to at-home work during COVID-19’s crisis. In fact, several larger companies — most notably Square and Twitter — have been happy enough with their employee’s work that they’ve already indicated they’ll allow workers to continue working from home even after the pandemic’s impact subsides.
2. Use Video Chat
If you are considering traveling or having employees travel for a work-related meeting, attempt to schedule the meeting using video conference software. While not all meetings can take place over video chat,Â many should work just fine with remote participants.
For instance, Merchant Maverick uses Zoom to hold a weekly coffee hour. We also have other meetings between teams using Google Meet, which is baked into Google’s G Suite. Since video chats let you see who else is talking, you may have better and more rewarding interactions than you might with phone calls.
Besides Zoom and Google Meet, video conferencing options include Skype and GoToMeeting. For more information on choosing video chat software for your business — as well as other options — check out Merchant Maverick’s guide to the best video conferencing services.
3. Sign Up For A Messaging Service
Not all interactions require video chat — that’s where text messaging services come in. These services can allow your business to communicate with one another on the fly more casually than video chatting or phone calls.
At Merchant Maverick, we use Slack daily. This service allows us to collaborate within teams or reach out to others individually. For many of us at Merchant Maverick, using Slack has simply become second-nature — it helps us improve communication over more traditional calls or email.
Slack isn’t the only player on the block. Twist is another solid option, while Microsoft Teams offers a good experience for businesses tied into the Office 365 ecosystem. For more details on which messaging service might work for your business, visit our guide to the best communication apps.
4. Email More
If video chat or dedicated messaging services won’t cut it, good old-fashioned email may be able to do the trick instead.
Email is fairly ubiquitous. According to Statista, over 4 billion users worldwide will have email access by the end of 2020. As such, communicating with email may be an excellent option to replace non-essential work-related travel — many vendors and other businesses outside your company should already be set up to communicate via email.
Keep Yourself & Your Employees Safe During Coronavirus
At the end of the day, you’ll need to decide which trips are worth the risk for your business. What counts as an essential trip will vary from business to business and from industry to industry. No matter what, make sure to take proper precautions that can keep you, your employees, their families, and the community-at-large safe during these troubled times.
For more of Merchant Maverick’s continuing coronavirus coverage, visit our small business resource hub for COVID-19.
The post Essential Work Travel: 6 Tips To Stay Safe While Traveling During Coronavirus (& 4 Alternatives To Travel) appeared first on Merchant Maverick.
For some people, knowledge of Human Resources begins and ends with Michael Scott’s relentless feud with HR-manager Toby during several cringe-worthy (and amusing) episodes of The Office. HR can seem like the prerogative of a bigger company, but not necessarily something a smaller business could benefit from. However, in reality, the role of HR is vast (and commonly misunderstood) and can operate as a bridge between your employees, you, and the practical side of having and managing people.
Wondering whether a Human Resources Manager, a full Human Resources Department, or an outsourced service is the best fit for your business?
Keep on reading to find out what HR is and whether or not your small business could benefit from adding human resources.
What Is HR?
HR, as a department within your business, is the branch of operations that is responsible for managing a company’s human resources (or human capital; or employees). The Human Resources (HR) department streamlines many important facets of your business and becomes an important link between the leadership of a company and its employees. The umbrella term HR covers the various ways employees are led and developed within a business. For that reason, there are numerous avenues of expertise within HR itself or different ways an HR department can function within a small business.
In general, the tasks delegated to HR can include onboarding, hiring/firing, running payroll, managing employment laws and compliance, addressing employee complaints, running employee training programs, and analyzing job duties and descriptions. HR specialists can bring their own pet passions to a company, but in general, the tasks orbit around employee management and growth.
HR VS. HRM
Human Resources (HR) is the department set apart to manage employees and employment; Human Resource Management (HRM) is the approach to how a company manages its employees. Some of those management approaches are related to recruitment, hiring and firing, employee education and training, employment compliance, and maintaining company culture. An HR Management team will work with a company’s human resources (employees and leadership) to implement processes and set goals.
Sometimes the terms are used interchangeably.
What Duties Does HR Fulfill?
From talent acquisition to letting people go, the HR department follows the life-cycle of an employee and works with you as the small business owner to effectively manage your team. An HR professional needs to be knowledgeable about the law but also informed about the specific niche-needs required for your particular business. A person working in HR wears many hats and often becomes a de facto counselor while also juggling compliance, training, and navigating employee relationships. With that in mind, your HR department is the face of your company to a new employee and they should set the tone and display the culture you desire.
Specifically, in the HR job description, your HR department will take the lead on payroll, hiring and firing, employee benefits, employee documentation, compliance, continued training, and helping maintain company culture. The role is a fine balance between paperwork and people–business objectives that don’t often go together.
The facilitation of payroll is something a small business owner might be happy to hand over to someone else. Payroll can be a long and convoluted process, especially if you’re currently running payroll without assistance. Opportunities to outsource payroll are expanding as more businesses make their systems available for small businesses at competitive prices, and many of those leaders in payroll are expanding their platforms to include HR and benefits management online.
Online payroll systems like Gusto, SurePayroll, Paycom or Intuit offer cloud-based payroll platforms that streamline the payroll process and can assist with onboarding and maintaining employee records. Companies like Namely, however, not only offer payroll services but delve into a broader spectrum of HR services, too, and work best for small businesses with over 50 employees to manage.
Hiring (& Firing)
The HR department (either a team or a single person) will greet a new hire with a request for quite a bit of paperwork, and it is the department’s responsibility to maintain those documents related to hiring, compliance, and job performance. (Paperwork, however, is slightly anachronistic as most of HR’s tasks have been relegated to the digital world.) The entire life-cycle of an employee belongs to HR: It is HR’s job to help the company with best practices related to recruitment through termination.
In that capacity, an HR department can relieve some of the burden from a small business owner by shouldering the minutiae of managing employees. HR works with company leadership to outline an ideal job candidate, write job descriptions, conduct interviews, follow-up with reference checks, outline performance reviews, and monitor/manage all employee records.
HR can also take on the task of having difficult conversations with employees who are under-performing. In the event that an employee is terminated, HR will set up an exit-strategy for your employees and develop a system: HR can conduct an exit interview, remove the former employee’s access to company communication, and run a final payroll.
Positively, HR manages employee growth and education within a company, including announcing pay increases and bonuses. Companies thrive when there is a clear growth model, and HR can take on the task of creating a uniform growth model and communicating performance requirements to employees.
According to the Transamerica Center for Retirement Studies, a 2018 survey of full-time employees reported that 94% of workers said health insurance was “very important” to them when looking at an employer. Up until recently, some small businesses were shut-out from opportunities to offer affordable health care or retirement.
Setting up benefits, communicating those benefits to employees, answering questions about benefits, and monitoring open-enrollment periods are all functions of HR. Also, HR professionals also have the resources and knowledge to negotiate lower rates to help control benefit costs.
Paperwork: Infinitely tedious but monumentally important to your business. Ensuring proper documentation is a crucial component of mitigating risk and protecting both your business and your employees. An HR department will manage and facilitate documentation on the following issues:
Paperwork required for hiring
Job performance reviews that lead to a promotion/demotion
All discipline related to an employee
Harassment and discrimination complaints
Failure to document might leave your business in a fragile position, and one of HR’s purposes is to guide a business when situations with employees become tenuous. HR can also be a neutral place for employees to feel safe voicing concerns and can advocate for employees who need a go-between them and management.
During my tenure as a public school teacher, I routinely spent warm August nights renewing my first aid and CPR certifications. It is a legal requirement that schools must maintain a certain ratio of adults with certifications to students in the building, and it is HR’s responsibility to have those numbers and photocopies of first aid cards in case they are needed. Every few years, I’d get nudged to renew my qualifications.
When it comes to HR and compliance, an HR manager’s job is to guard your company against employment/compliance lawsuits. Risk management is a huge part of the HR job description, so hiring someone with specific knowledge of your industry is important.
In recent years, company culture has become an important part of managing employees.
Company culture conveys not only your company’s personality, but also its fundamental value-system. More than ever, prospective employees are interested in a company’s values as a prerequisite before applying. People want to work where they will feel valued, supported, and understood, and it is your cultural environment that sets the foundation for your employees to feel that value, support, and understanding.
HR may be the first face of your company to new recruits and interviewees, and so it’s vitally important for HR to have a strong sense of the company culture you wish to convey. What does that look like? As a small business owner, you choose the culture of your company. So, hire someone who is well-equipped to assess your employee’s skills and know the needs within the company. HR needs to understand the small nuances within your business and must employee messaging that consistently conveys company culture.
Does Your Small Business Need HR?
All small businesses could benefit from some type of HR platform or person to help assist with the more tedious aspects of employment (payroll, documentation, compliance).Â Do you need an in-house HR manager? Maybe not yet. But the good news is that we are entering a golden age for cloud-based/remote assistance for small businesses in areas that were traditionally closed to smaller companies.
As companies grow, it’s important to know when it might be time to devote more attention/resources to HR. Think of the amount of time you spend on clerical documentation of employees or payroll; think about how confident you are in your knowledge of employment law; contemplate the systems in place for employee complaints– are you leaving areas of your business open to employment liabilities? Does new-hire paperwork take up a significant portion of your time?
HR professionals are equipped to navigate these facets of employment, but whether or not you need to hire in-house or outsource is up to you. If you still aren’t certain if you need HR at all, reflect upon some of the key functions of this department and see if they fit with your needs:
Streamlines the hiring process and takes over new-hire documentation
Runs payroll and manages benefits
Assists with employee retention and satisfaction
Manages employment law compliance
Writes and updates the employee handbook
Resolves employee conflicts and can mediate human resource difficultiesÂ
How To Choose The Right HR Option For Your Small Business
How much HR will your business really use? With one or two employees, simple payroll needs, and low turnover, you may find you’re not ready to invest in outsourcing or hiring when you can DIY. But companies that can afford to outsource the administrative tasks of HR should consider looking at the options available. In recent years, some old names in HR have developed new online platforms to assist businesses with every aspect of HR. Some of the bigger names like Namely are only available for companies with 50 or more employees; however, many other options, like Trinet, serve small businesses of all sizes.
Three HR options available for small businesses are:
1. The Startup Mindset: Handle HR Yourself
It may be a cliche that small business owners have an excess amount of drive and energy, but the evidence seems to support the image. When a business is starting, every saved penny is necessary to put back into the company, and those early months need all the stretching they can get. Simply put: If you can do it yourself, then you just do it yourself.Â With tight margins and an unclear path for the future, some business owners need a lot of convincing to pay someone to do tasks that they are capable of doing themselves. And it can be done.
Free accounting programs can assist with payroll and you can make yourself available to talk with employees. You can download or pay once for the creation of an employee handbook, and with time and creativity you could provide employee training. If you feel comfortable with employment law and know that you have the time and emotional resources to be a neutral advocate for your employees, then by all means, handle HR yourself.
2. Hire An In-House HR Manager
There are some businesses that are well-suited to have an in-house HR manager vs. heading the digital outsourcing route. Does working with employees require a significant amount of face-time? Do you hire/fire several times throughout the year? If you said yes to either of those questions, you might need to hire an in-house HR manager. People who work in HR are trained in a variety of different methods regarding the best practices for employee retention and keeping morale high, so you will want to find a good match. (Two different views about how to manage people or what to value in an employee could get complicated. Explore what types of HR methodologies match your business style before you set out to hire someone.)
Also, there is the possibility of hiring an in-house HR manager and then equipping that person with the ability to outsource some of their duties to a Professional Employer Organized (PEO) or Human Resources Management (HRM) company.
3. Outsource Your HR
There are also options to fully outsource your entire HR department to a PEO or an HRM. Employees and business owners alike might find that it’s easiest to streamline aspects of the employee life-cycle using online software. This automated system usually comes with a fee per employee, and offers in-software functions that cover many HR requirements. The best software includes easy employee log-in and navigation, mobile access, payroll, time and attendance platforms, expense tracking, benefits administration assistance, access to training modules, and a customer rep to call directly in the event of a question or concern.
Most of the savvy HRM platforms are designed to look like social media platforms and operate as a place to connect socially as well as send out important employee announcements. As the need increases, integrations grow and the software pivots to respond to client demand; and in that regard, outsourcing is a sure-fire way to stay on top of HR trends.
Final Thoughts On Human Resources
Maybe in the next reboot of The Office everyone works remotely and HR is a robot. That might have seemed like a left-field prediction a few months ago, but now, who knows? If you are spending an exorbitant amount of time on HR administrative tasks, it is highly likely that an HR professional (either in-person or via the cloud) is an important step to grow your business and give your brain a rest. While outsourcing costs can vary between platforms, the mid-line options are less expensive than hiring a full-time HR manager.
Above all, whether you hire in-house or outsource, the HR platform you implement should reflect your business values and make your day-to-day management of employees easier and more streamlined. For growing businesses with a handful of new hires a year, the benefits (and protection) outweigh the costs.
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