“What we're seeing now is unprecedented, unplanned for, uncalled for, and there was just no way to ever anticipate or prepare for it. Things are different… We have to adapt and we have to do that immediately and on the fly. We can't think about what it was like yesterday or what we would like it to be, or what we want it to be. We have to look at what it is now. And I think for a lot of people, it's just about survival.” —Ed Mendlowitz, Partner Emeritus at Withum, Smith, & Brown
How Can we help our clients, right now, based on what we know now?
- Build a strong foundation: What clients want is reassurance. They want availability and to know that we are here for them and will always be here for them. So, get on the phone and call them and ask them how they are. They're hurting, and they need someone knowledgeable about their fears and their losses to guide them. Give honest guidance, and let them know if you approve or disapprove of moves they want to make. If you don’t think a decision of theirs is wise, your responsibility is to convey that. In many cases, the value add of a CPA is objectivity.
- Get your clients everything they’re entitled to: Every benefit, every loan, every opportunity. Get your clients—every single client—to apply for the SBA loans and grants that are available. We have to let them know we know how to apply, and we have to be willing to get on the phone or Zoom with them while they fill out the application.
- Paint a picture of reality for your clients: Tell them what is realistic. Sometimes that means closing rather than operating through this. The name of the game is survival and conservation. The goal is to keep every client’s business around so it can reopen. Things are going to get better sooner or later, they are going to change, and they're going to get better. We have to try to help them survive at all costs, even if that means working for them for free.
- Focus on a long-term plan for recovery: If your client had to close shop, walk them through how to reopen the right way so that they can salvage and maximize what they have. “In a year from now, we'll look back at this, and we're going to be much stronger than we are right now.”
- Creatively conserve cash: There are creative ways of conserving cash without cutting expenses. “I'm telling people not to pay their rent. Don't pay it. You have to pay suppliers, but pay suppliers, if you can, on a COD basis. Get savvy about spending; if you usually place an order for $5,000 worth of goods, don’t! Instead place two orders of $2,500 with healthy spacing so you can stay on top of cash flow and try to hold onto some liquidity.
- Cut the fat: A lot of employers carry one or two workers who really don't perform. When things are status quo, everything works well enough and your operation has a cadence that you don't want to upset by letting people go, and so one or two less productive individuals are carried. To keep your core employees safe and secure, now is the time to let the less productive people go—it’s your responsibility. Before cutting salaries or shortening the work week, do what you can to protect your essential crew.
- Do anything to keep your key players: You do have to cut staffing that you don't need. However, if you have staff that you've trained and work well with—the kind of staff that becomes family—you really can't let them go. And if you do, you may not get them back. Prioritize keeping this staff by any means necessary. Cutting all non-essential expenses is a given, but if that doesn’t get you there, ask your staff if they would take a 25% cut in pay. People are spending less right now, and the 25% would likely be a big deal to the employer who will save on the salary but also on payroll taxes and benefits. If a salary cut could help guarantee employment, the long-term gains of that security should outweigh short-term discomfort.
What are some tactics that you're implementing in your firms today? Comment below!