The pandemic presents an unparalleled crisis for print shops. There has been a severe interruption to regular business activity and daily life. However, you can save your business. There is a universal theme among small business owners: you must make hard choices today to ensure you have a business tomorrow. Here are some money-managing tips to help get you through.
Reduce accounts receivable
Have a staff member solely dedicated to reducing your accounts receivable. Collect as much cash as you can.
Call every customer that owes you money and getting them to pay or figuring out a plan to pay as soon as possible.
Protect your cash supply at all costs. Settle up now!
Get rid of debt and delay accounts payable
Call your creditors and ask for help. Negotiate leases, loans, and any other debt. Immediately work to protect your cashflow. Audit your debts by cost and importance, and determine how much risk is in your shop.
Call all parties involved with any debt you have and inform them of your current status. If you can make three months of payments, tell them that and be prepared to do it. It’s better to be open with them right away before you’re in a dire crisis. Most creditors offer deferment and reduced payments.
Talk to your landlord about reduced rent. Speak with your banker about reduced payments or extensions. Realize that your creditors are likely looking for chances to reduce their risk as well right now too.
Offer temporary leave and help employees get unemployment benefits
If your employees are open to it and financially able, offer brief furloughs, where they stop working for some time. However, please note that in many states, furloughed employees may not be eligible for unemployment benefits.
If it’s more favorable to your employees to lay them off temporarily so they can collect unemployment benefits, offer to contact them after a set amount of time to check in on the status of their job.
Additionally, if there is an employee that you need to cut or are contemplating cutting, this is the time. Make the hard cuts now.
Tip: Find your state’s unemployment office website and send it to laid-off employees. Many states have suspended insurance rate increases for unemployment claims. Some business owners qualify for unemployment in specific locales.
Leadership and management cutting hours and pay
First, take a pay cut yourself. That is a tough pill but shows real leadership during a time of crisis. Inform the staff of this action.
Next, have a candid discussion with management about the current situation. Staff will not only offer advice but help you decide what’s possible. Some may be able to take reduced salaries or hours. Then, offer reduced pay or reduced hours to your rank-and-file staff.
While you still must abide by all labor laws, you can offer your employees the choice of a pay cut or reduced hours upfront.
100% downpayment policy
Get pre-payment for all orders going forward. Now is the time to implement this policy. No exceptions. This is an existential matter for screen printing businesses right now. Our industry is not in the position to offer customers interest-free loans during the best of times, and certainly not now. Preserve your cash flow at all costs.
Back to basics: cut where you can
Review last month’s expenses and begin cutting them. The sooner you feel the pain, the easier the process. Here’s how to structure this process: list all your recurring bills or payments from largest to smallest. Then determine:
- Must have expenses
- Necessary, mission-critical overhead
- Think rent, leases, etc.
- Nice to have expenses
- Any nice things, but perhaps not mission-critical
- Think trade groups, high-end products, etc.
- Must-cut expenses
- Recurring expenses that don’t impact operations
- Subscriptions, perks, other unnecessary but small things
- Worst case expenses
- Consider what you absolutely cannot live without and what to do if you had to give it up
- In what order would you lay off staff if you had to? This is a scary thought, so you need a strategy
For more helpful information, check out Printavo’s blog here.