Happily, most our business clients have adjusted to the new reality of 2020 and are holding up well, with residential home building industry leading the way. This does not mean that there haven’t been casualties. Small businesses such as restaurants, bars, gyms, hotels and certain medical practices obviously have been the hardest hit. We have shuttered and terminated some businesses already and believe there are more to come. There is still a large portion of our workforce unemployed, underemployed or working for reduced compensation. That fact coupled with the disruption in the supply chain gives me pause for the 2021 outlook, even if a vaccine becomes widely available.
Third party acquisition market has substantially slowed down. With exit strategies limited, we are seeing a renewed focus on insider buyouts, corporate reorganizations and internal succession planning. These topics are fraught with issues where we can provide valuable insight and alternatives that will minimize risk for all parties.
Top 7 Thoughts for Business Owners
With that said, I am optimistic about the long-term outlook for the United States and Arizona. Businesses that can survive the current disruption will prosper once we get the virus under control and stabilize operations. In the meantime, below are my top 7 thoughts business owners should keep in mind this year:
1. Pay down or refinance long term debt on fixed assets, real estate and equipment.
2. Increase liquidity by adding to cash reserves.
3. Test credit and other operating lines by requesting a draw.
4. Communicate with employees regarding office procedures, paid time off, cross training and coverage for absent employees, as well as alternatives for the upcoming holiday season.
5. Challenge your team to adapt to the current business environment, search for ways to be more efficient, with an emphasis on maintaining some profitability.
6. Invest in the business by expanding its market share through increased marketing, the addition of key employees or expertise and strategic acquisitions.
7. Review and revise 2021 budgets, strategic plans and business continuity plans.
Liquidity is key. Nothing will kill a business quicker than the inability to pay its fixed costs while temporarily shut down or restricted from operating.
Of course, if you have a question or need to talk through an issue, please give us a call at 480-281-1512.
