Due to COVID-19, cities are enforcing curfews, governments are issuing new guidelines, and many businesses are closing their doors temporarily. As a business owner, you may find yourself wondering if your business should do the same. But before you do, consider the following questions:
- How will I know when it’s the right time to close temporarily?
- What legal and financial risks could affect my decision?
- What financial assistance do I qualify for if I close temporarily?
- What should I do if I get sick?
How to know when it’s the right time to close temporarily
As you think about closing your business for a time, you’ll want to consider key factors. These factors include government mandates, suppliers, your health, and more.
Consider external factors
Government mandates or recommendations
As of March 18, the Centers for Disease Control and Prevention (CDC) recommends avoiding gatherings of 10 or more. Additionally, some state and local governments have enforced limits on restaurants and the number of people they should serve. Meanwhile, Bay Area lawmakers and health officials have mandated that citizens “shelter in place.”
The number of confirmed cases in your area
The number of confirmed cases in your area may affect your decision to close your business. If there is an increase in reported cases near your business, your local health department may advise businesses to close to protect the community.
If your suppliers or shipping service have shut down production, they may also force your hand. As of March 11, 39% of small businesses negatively affected by the pandemic were experiencing supply-chain disruptions. That number is likely to rise as the pandemic creates ripple effects across global commerce.
How to manage external factors
As the pandemic continues to spread, more disruptions may be on the horizon. Here’s what small business owners can do to manage external factors:
- Check government websites for updates on current restrictions from federal, state, and local lawmakers and health officials.
- Research the number of confirmed cases in your area.
- Communicate with your suppliers to stay current on changes to shipment schedules. Ask your suppliers if they’ve created long-term plans. Then consider how these plans might affect your business. Notify customers of the potential for delays if your supplier is experiencing troubles.
Consider internal factors
Your and your family’s health
Consider your health if you’re within a group the CDC says is at high risk for contracting the coronavirus. Consider your family, and if anyone you live with is at a higher risk. And keep in mind that you may not experience symptoms but can carry the virus and transmit it to others. If you feel your health or your family’s health is at risk, then social isolation might be the best protection. And that could mean closing your business temporarily.
Your employees’ health
Consider the health of your employees and their families. If employees are at higher risk of developing severe symptoms, then it may not be safe for them to continue working near others. Social distancing may help protect them, but not all employees can do their work from home. Consider your options, such as staggering shifts and limiting the number of people on the clock.
Your business revenue, cash flow, and savings
Many small businesses run on tight margins. And with people avoiding public spaces or stores, your business may be affected by low sales. Disruptions to cash flow can be hard on your finances. And you may have to dip into your personal savings to recover. Evaluate your finances and business performance to determine how much a temporary closure will affect your business.
How to manage internal factors
If any of these internal factors are influencing your decision, explore the following options:
- Limit contact with any at-risk people who may frequent your business.
Follow the CDC’s advice on reducing transmission.
- Ensure everyone washes their hands regularly and doesn’t touch their face.
- Sanitize high-traffic areas.
- Maintain a distance of 6 feet (2 meters) from customers and other employees.
- Stagger shifts so that employees are not all on the clock at the same time.
- If anyone is sick, make sure they stay home.
- If possible, ask those at higher risk to work from home to avoid contact with others.
If your business revenue or personal revenue is at risk of experiencing financial hardship, consider:
- Generating income with delivery services or online ordering.
- Creating a business continuity plan to document how you will weather the pandemic.
- Preparing for any potential operational or supply-chain disruptions.
- Comparing the cost to stay open (including overhead costs, payroll, etc.) and close temporarily.
Legal and financial risks
As the pandemic spreads, you may experience legal and financial fallout if you choose to stay open.
Local, state, and federal guidelines can change at a moment’s notice. Some cities have shut down restaurants, bars, gyms, and schools. If this happens in your city, do you have legal obligations to close your business? Potentially, depending on local mandates. Follow local guidelines and speak with a legal expert in your area if you’re unsure.
Other legal risks may include employee lawsuits for unsafe work conditions. In the United States, the Occupational Safety and Health Act (OSHA) sets the standard for employee safety. In the European Union, EU-OSHA sets the standard.
Both agencies (EU-OSHA and OSHA) have released guidelines for employers on preparing the workplace for the coronavirus. Neither department outright suggests businesses close their doors. But the guidelines could provide a legal defense if workers are exposed to the virus at work or employers don’t take precautions.
During this time, unprepared employers may be vulnerable to other lawsuits, explains the Harvard Business Review (HBR). These may be related to workers’ compensation, invasion of privacy, discrimination, unfair labor practice, and negligence. But business owners who stay vigilant, informed, and prepared can minimize potential risks to employees. And, in turn, they can minimize legal risks for themselves. HBR suggests eight ways to help reduce legal risks:
- Remain informed of CDC and World Health Organization (WHO) guidelines in your area.
- Heighten hygiene practices to prevent the spread.
- Consider restrictions on returning to work if an employee is sick or has been exposed. Consult a medical professional if you are unsure of an employee’s risk of exposure.
- Be cognizant of your duty to care for employees. Follow OSHA or EU-OSHA guidelines that apply to your business.
- Assess existing leave and pay policies in the event of an employee’s sickness or disability. As needed, revise policies to match current circumstances.
- Ease stress and anxiety in the workplace as much as possible. Consider if you can be more flexible in allowing time off, remote work, or other accommodations.
- Protect employee privacy and any personal health data they may be obligated to disclose.
- Create a contingency plan for the worst-case scenario. And follow all legal requirements for employee layoffs or furloughs.
Closing your business, even temporarily, can result in significant financial losses. So you’ll need to consider if you can afford to close and if staying open will cost more. Whatever you decide, you may still need to cover the following costs and expenses:
- Employee pay. Will you continue to pay employees after you’ve closed the business? Or will you lay off employees and offer severance pay? Check local and federal laws for further guidance on layoffs.
- Overhead costs. Contact your leaseholder, landlord, or loan provider to see if they can waive payments temporarily or accommodate payment plans. Then contact your utility provider to see if they offer a similar service. If not, you may still have to pay rent, mortgage, and utilities on your business, despite closing your doors.
- Supplier costs. If you’re still receiving inventory, you still need to pay suppliers, regardless of sales. Speak with your suppliers to determine a course of action.
- Miscellaneous expenses. You’ll need to consider monthly payments on business tools and credit card payments. Speak with each service provider to determine if they can offer financial assistance.
Other local businesses may provide some inspiration on what to do. Speak with your local small business council, neighboring businesses, business advisors, or Small Business Development Center (SBDC) volunteers to get advice. You might also speak to:
- An employment attorney. They may be able to help you in the event of a layoff and ensure you’re compliant with all necessary laws.
- Your accountant or bookkeeper. They will be familiar with your business’s finances and situation. They can also help you build a plan for when you hope to re-open.
- A reputable business advisor. They can keep you informed of important changes in your area.
- Your financial advisor or certified public accountant (CPA). They can help you make sure you have your personal finances in order.
Financial assistance for businesses that need to close temporarily
If you decide to close your business temporarily, you may need financial assistance to ride out the storm. Depending on where you work, you may have a few options for financial aid.
Check with your local small business council to learn more about local assistance programs. The city of San Francisco’s Small Business Resiliency Fund offers emergency grants to microbusinesses affected by the coronavirus. Meanwhile, Seattle is adding a $1.5 million grant to its existing Small Business Stabilization Fund. And New York City is offering relief funds, grants, and zero-interest loans to qualified small businesses.
Your state may also have relief funds in place to help small businesses. The National Conference of State Legislatures (NCSL) is tracking state legislation on coronavirus relief bills and state fiscal responses.
Before you apply, you’ll want to check that you qualify for any aid. When applying, you may also need to supply additional documentation. This might include your Employer Identification Number (EIN), evidence of lost sales due to the coronavirus outbreak, and personal identification.
Research your options with the Small Business Administration (SBA) to determine if you qualify for financial assistance. The SBA can provide loans for small businesses through their disaster loan program in some affected areas. Before you apply, you’ll want to make sure you are eligible for federal assistance. And you may have to present a declaration of economic loss, submitted by your governor.
What to do if you get sick
1. Seek medical attention and follow CDC and WHO guidance
Consult your primary care doctor if you feel sick or are showing any of the symptoms of the coronavirus. Your doctor may direct you to a nearby testing site. Symptoms can include shortness of breath, a dry cough, fever, headache, and pressure in the chest. Seek immediate medical attention if you experience severe symptoms. Follow all CDC and WHO guidelines if you test positive for the coronavirus.
2. Consider your health and ability to continue working
If you or someone in your household is at a higher risk for contracting the coronavirus, continuing to work may be risky. Unless you work remotely for your clients, continuing to interact with customers and clients could expose you to the coronavirus.
3. Consider the health of your customers and clients
If you work with your clients directly, you will also want to consider their health. If clients are at a higher risk of serious complications, you may want to work with them remotely or stop working with them temporarily.
4. Consider your ability to fulfill orders and meet customer needs
If you choose to continue working with clients, you will want to consider how this may affect your work. And if you get sick, your health might impact the quality of your work. Consider how your customer service, work, and results might suffer if you get sick and choose to stay open.
5. Consider your ability to get financial assistance or additional workers
Your business and personal finances might suffer if you choose to close your business. But the cost to run the business might also hurt you financially if you choose to stay open and lose sales. Consider the financial safety nets you have in place, and if you can apply for financial assistance in your area. Finally, consider if you can hire someone to take over your work in the event you get sick or need help.
Making your decision
Temporarily closing your business is a serious decision. It’s important to weigh all the factors. Seeking advice from experts and advisors can help you make the best decision possible. The good news is there’s more assistance available to small businesses right now than ever. With help from the community, your state, and the federal government, small businesses will have the options they need to weather the storm.
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