Temporary business closures do not happen only in case of small or new businesses. Even the most established companies might have to be temporarily shut down to recover from issues such as natural calamities, low profits, and national crisis (Eg: COVID-19 pandemic).
Due to the coronavirus outbreak, governments have started announcing new policies, cities have begun imposing curfews, and several businesses have stopped functioning temporarily. You may wonder, as a business owner, if your business also should opt for the same. Before you make a decision, consider asking yourself the following questions:
Is this the right time to close your business temporarily?
You will need to consider factors such as your suppliers, your health, government recommendations, etc. before thinking about closing your business temporarily.
- The government has made it mandatory not to have gatherings of 10 or more people. You will need to see if this mandate has an impact on the type of business you deal with. You will need to make the decision of closing or keeping your business open based on such mandates or recommendations the government makes.
- The number of COVID 19 cases in your business vicinity can influence your decision about closing your business temporarily. When there is a spike in reported cases near your business facility, you can be told by the local health department to close your business for a certain period with an aim to protect the community.
- Talk to your suppliers to understand if they have made any long term plans to handle the supply-chain disruptions. See what impact these plans can have on your business. Inform your customers regarding the potential delays they might face considering your supplier is not able to make the deliveries on time.
- Most of the small businesses work on thin margins. And with the public avoiding public spaces or stores, low sales may affect your business. Cash flow fluctuations can be difficult on your finances. And in order to recover, you might need to tap into your personal savings. Review your finances and company performance to assess how much your business will be impacted by a temporary closure.
What will be the legal impact if you choose to keep your business open?
With the increasing COVID-19 cases across the country, you could suffer legal consequences if you choose to remain open.
The state and central government guidelines can alter at a moment’s notice. You will need to check if you have the legal obligations to stop your business for a temporary period. Consider following the local guidelines, and in case you are unsure, have a word with a legal expert in your area.
What is the financial assistance you will need to close temporarily?
Even if you choose to close your business on a temporary basis, you might end up facing major financial losses. You need to analyse if you are capable of affording a temporary business closure. In case you decide to stay open, you will need to check if you are in a position to afford the following costs:
- Employee pay: Do you think you will still be able to pay your employees after you’ve shut your business for a certain period? Will you consider laying off your employees by giving them a severance pay?
- Supplier costs: If you are still getting the inventory, you will still have to pay your suppliers, no matter how the sales numbers look like. Talk with your suppliers to decide on a course of action.
- Overhead costs: Talk to your landlord or loan provider and see if your payments can be waived off temporarily or if they can accommodate alternative payment plans. Get in touch with your utility provider to check if they provide a similar service. In case they don’t, you might have to continue paying rent and mortgage concerning your business, despite closing it.
What steps do you need to undertake in case you fall sick?
- If you feel sick or showing any signs of coronavirus, contact your primary care doctor.
- If you are working directly with your clients, you’ll have to consider their wellbeing as well. If your customer is at a higher risk of any serious complication, you might want to work with him or her remotely, or temporarily avoid working with him or her completely.
- When you decide to close your business, your personal finances also will take a hit. However, the cost to operate your business may also take a hit on your finances if you choose to remain open. Check for the financial safety nets you could access at this point in time to be prepared in advance to face the financial crisis.
Closing your business temporarily is undoubtedly a difficult decision to make. It’s important to weigh all of the factors before you make a final decision. You could consider taking advice from advisors or experts to help you make a decision which acts in favour of your business.