SFA Risk Mitigation Webinar Recap: Managing Forward in an Unsettled Economy

The SFA’s Business Continuity: Risk Mitigation Planning webinar series employs industry experts to assist SFA members with challenges related to the current unsettled business environment. In this installment, Gerber Finance CEO Jennifer Palmer and director of development Augusta Melendez address how the current market may be affecting business and how as business owners we can grow, save or manage forward during this uncertain time

• Review your budget and be prepared to revise weekly, said Palmer. Don’t be afraid to prepare for the worst case scenario.
• Communicate. Communicate with your team, your suppliers, your customers, and your financial advisors.
• Make sure your employees have the resources they need to work efficiently from home.
• Tell key contacts how are you are managing through this; be honest and manage expectations. Remember that foreign suppliers may not be up-to-date about what is happening in the U.S.
• Realign your marketing efforts. This may not be the time to spend money on advertising, but if you choose to, you may want to spend it online.
  • Palmer noted that companies should be mindful in their advertising. Be sensitive and don’t be too pushy. Building customer loyalty is key.
  • Some companies are taking what they normally spend on travel and expenses to increase their marketing budget, or invest in their technology systems.
• Manage your supply chain. Consumer demand ebbs and flows; make sure you can keep up.
  • Consider diversifying your supply chain if you’re able to.
• Don’t just think about the short term. It’s imperative to think about the third and the fourth quarter of the year. Think about what you need to do to keep business going in the long term.
• Don’t be embarrassed to ask for help, said Palmer. If you have good relationships with your suppliers, you may have the opportunity to negotiate or compromise on your contact terms.
• If you are anticipating cash flow issues, talk to your suppliers, vendors, and/or your landlord early and proactively.
• If you want to create a payment plan, you may want to think about prioritizing the importance of payments by levels. Or, decide to make payments based on a percentage across the board.
• Maximizing liquidity is important. Liquidate what you can.
• Do a cost/benefit analysis before you let people go. The cost to replace employees is 33 percent of a worker’s annual salary.
  • Maybe have all employees take a small pay cut instead of laying people off.

If you need financing, there are several different options available, according to Melendez.

• Family and friends
• Asset based lending, which is secured through assets like inventory, accounts receivable, equipment, or other property
• Factoring, which is when a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount
• Purchase order financing, which is a short-term commercial finance option that provides capital to pay suppliers upfront for verified purchase orders
• Merchant cash advance, which is a lump sum payment to a business in exchange for an agreed-upon percentage of future credit card and/or debit card sales.

Click here to view full recording.

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