I started joking weeks ago that overuse of the word “unprecedented” resulted from everyone’s avoiding use of more colorful terms when distinguishing the new world from pre-pandemic reality. You’ve barely been able to get through a news conference since mid-March without hearing that word, “unprecedented,” multiple times because it’s true. We’ve never seen anything quite like this, and many – if not most – of our businesses were no more prepared for it than governments, hospitals, families – anyone.
In addition to the very real human cost and societal impacts, have businesses been impacted? Unquestionably and profoundly. Will the business world return to normal? I say no, not if “normal” means the way “it” was before (“it” being business models, strategies, sales cycles, succession plans, hiring and retention practices, financing needs, entity structures, accounting practices and needs, tax profiles, etc.).
The old status quo is behind us, and it’s not coming back. That is challenging for some small businesses, unavoidably tragic for others. People – actual people, not numbers on a page or entries in a ledger – have lost jobs, livelihoods, and dreams, and some of them won’t be replaced. We can’t dress that up or pretend it isn’t happening. Those people need help, and a recovering and healthy business community represents one source of that help. To that end, the challenges and opportunities presented through, because of, or sometimes in spite of this “unprecedented” season should be noted, assessed, and grabbed by their metaphorical lapels with every hand we have. But how to start?
Where Have You Been?
Businesses need to be able to accurately and quickly assess past performance, sometimes over the sweep of an entire year or multiple years, sometimes in terms of months, weeks, even days. Now – not months from now – is the time for accurate and fast, even real-time financial reporting and performance data.
Where Are You Now?
Have you borrowed PPP or EIDL funds? Laid-off workers? Exited a market or lost customers? Lost vendors? Businesses have to be able to assess how their worlds have already changed, what is permanent vs. temporary, and how these new or changed circumstances affect their decisions tomorrow. For instance, PPP funds must be disbursed in particular ways both to comply with the law and to ensure maximum forgiveness, and this affects staffing decisions in major ways. Likewise, the timing of a business’s ability to reopen and reenter markets – and whether those markets continue being affected by restrictions – aren’t factors that should be allowed to simply happen with no forethought or planning. Have suppliers been affected or lost, requiring a rethinking of supply chains? In a variety of ways, the old rules have changed, and some of them won’t be changing back.
What Weaknesses, Vulnerabilities, and Opportunities Have Been Uncovered?
Closely related to the above thoughts regarding changes, what critical weaknesses or vulnerabilities in your business model and/or markets have been uncovered? Has a receding tide revealed repair needs in the hull of the business, or are design and structural changes needed? Is there an opportunity for improvement available as the journey back to full operation begins? Has a competitor exited a market, or are there other growth opportunities? Should all staff who may have been furloughed be brought back? Should more? Do new conventions and understandings of personal interaction and groups affect your staffing and business models? Should functions and responsibilities be changed or consolidated? Is your business cycle ripe for reimagining? How did your technology hold up? Did you have a disaster plan?
Is Your Strategic Plan Still Viable? Your Exit Strategy?
All owners do – or should – have a larger purpose or strategy than the mere creation of profit. Has this moment in history made you rethink your “why”? Has it uncovered a need to figure it out? If you have a written strategic plan, does it need to be rewritten? Recreated with a blank sheet of paper? If you do not have one, what should it say? There has never been a better time than now to go through this process.
And what about your exit strategy? All owners have one thing in common: they all exit their businesses eventually. Has the crisis changed your time horizon? Do you need to rethink your exit options and/or potential successors?
A lot of people are going to spend a lot of time analyzing this time in terms of its historical, economic, and societal impacts, and the forces impacting specific businesses are many and various – and not all of them are even fully understood yet. There is so much to consider that it can seem overwhelming. The factors and steps can be broken up into as many 7 step plans or 10 things to consider or 5 ways to recover that you want, but two things are true: first, you have to start; and second, a wise adviser can help. Call or find that adviser. And get to it. We all have work to do. Together.
Michael A. Carraway, Jr., CPA
Michael A. Carraway, Jr., is a partner with GranthamPoole PLLC and a recognized leader in the field of partnership and corporate taxation, having worked with many clients on entity and transaction structuring matters. He has also written, taught, and spoken on many topics in the area over the years and has served as a technical subject matter expert in several practices. Please contact Mike at firstname.lastname@example.org, www.linkedin.com/in/michaelcarraway, or 601-499-2400. CPA License # R2705
***The above does not represent tax advice. Each situation is fact-dependent, and you should seek the advice of a competent advisor. GranthamPoole PLLC is a provider of tax, accounting, advisory and strategic services, partnering with clients across a broad spectrum of industries and sizes.