As a business owner, you have most likely already applied for the incentives that can be received through the Payroll Protection Program. If not, please visit sba.gov to learn more.
But as we all anxiously await the disbursement of these funds, it is important to start thinking about how to utilize the funds you are about to receive. Let’s face it, we are in some very strange times and how this all plays out is still to be determined. So how do you maximize what you are about to receive, to ensure you do not just end up taking on additional debt and still having no positive impact to your business? Here are five ways to plan for:
Ensure the Funds Are Forgiven
The most critical thing you need to do is ensure that you are allocating these funds to costs that will ultimately make this loan forgiven. Although we do not know the full details, below are the costs that are being outlined as ‘forgiven’, with some key assumptions to make sure you adhere to.
Forgivable Costs: payroll, mortgage payments, rent, and insurance costs within the first eight weeks of receiving the proceeds.
Assumptions: do not fire employees or slash payroll
After all, the funds are being disbursed to ensure more people do not lose jobs. So do your part and retain your employees, do not slash payroll, and ensure that for the first eight weeks you are allocating these funds to these costs, to ensure you are not ultimately taking on more debt within your organization.
Maximize Your Employee Down Time
Seeing that you cannot fire anyone or cut payroll, and things are slow, how can you maximize your employee down time? They are suffering in these tough times as well. How can you work together to ensure your company, and their job, both exist on the other side?
A common issue we find in working with many businesses are the lack of defined processes within the organization. What better time than now to dig into these processes and really define what needs to be done and better understand what issues different departments are having, as it relates to the processing of information.
Your employees are the people in the trenches within your organization. Supporting them on defining these processes will enable and empower them, while reducing frustration and starting to create a culture of transparency and collaboration. All things that will make you better as an organization on the other side.
Invest in Long Term Efficiencies
If you want to take it one step further, look to invest in some technology that might create even more efficiencies for your employees. Technology has evolved exponentially in the past few years and there are countless applications that could streamline a process within your organization. A few hundred dollars a month investment might save your employees thousands of dollars in lost time, not to mention make them happier to come into work.
But there are too many options! Yes, we know this, and that is why we are here to help. Have a specific business problem? Let us know, and we can recommend some solutions. There are countless applications out there that automate and solve a specific business problem that could save your employees a lot of time, and you a lot of money. Don’t be scared to automate these tasks. The longer your take to automate them, the more you must pay your employees to do tasks that can be automated. Ultimately, this leads to higher fixed costs to you and added pressure on your bottom line.
Document Your Investment in R&D
Many businesses do not know this, but there is a tax credit that is available for qualified businesses who invest in Research and Development resources. What this means is that if you are investing in innovation and creating long term value, you might be eligible for a tax refund on top of all of this!
I would like to remind you that you will need to consult with a tax professional on this. Want a recommendation? Contact us.
What this means is that the monies you would pay for technology, the employees that are innovating with the technology, and any third parties who might be helping with this initiative, would not only be a write off, but you could also receive additional incentives from the government to make this cost even cheaper.
With this, suddenly you are creating efficiencies, automating tasks that no longer need to be completed, AND you might be able to save money on taxes. Sounds too good to be true, but it isn’t.
Invest In Your People
We know that times are tough and money is tight, but the same thing goes for your people. Each of them are scared and are looking to their leaders for the answers. What more powerful a message for you to send your employees at a time like this, than to invest back in them!
We are not certain where things are going to be in the next few months. Jobs will be lost and salaries might have to be cut. When these difficult conversations are needed, you cannot be the only messenger. Identify the top people within your organization, those that are going to stick it out with you during these tough times, and invest in them. Whether it is time, education, experiences, or programs, use this down time to develop your people and give them the skills they need to transform your organization.
Need some recommendations? Contact us and we would be happy to share some of our own executive coaching resources as well as external courses that we can recommend.
Summary
Is this a one time occurrence or is this a message to all business owners to wake up and realize that technology is evolving at an exponential rate and throwing bodies at undefined problems is not a long term solution?
You are about to receive a lump sum of money to help you through these tough times. Are you going to view this as a patch to get you through the next few months or view it as an opportunity to invest in your employee and your company’s future?
We believe that the companies that maximize this situation will be the ones that not only survive, but thrive as we emerge from the current situation.
Want to talk further? Schedule some time with us below.
