It’s Go Time! Act Fast to Save or Shutter Your Business

In this crazy new world we’re living in, small businesses nationwide are torn on how to proceed, especially those suffering significant sales losses due to the COVID-19 crisis. As the pandemic rages on and the economic ramifications keep multiplying, the outlook for many food brands and farmers appears bleak. And with no idea of when normalcy will return—or what “normal” will even look like on the other side—it’s easy to feel frustrated, stuck and unsure what to do next.

But business owners can’t afford to be paralyzed by indecision. The time to assess the options and act is now. As we discussed in FFI’s virtual huddle this past Monday, all signs point to a significant and prolonged recession following the pandemic. Therefore, the longer food and farm businesses languish in uncertainty, the deeper the hole they risk digging, making it even harder to get back on their feet down the road.

So what should entrepreneurs do? We’ve been saying this over and over these past few weeks, but it can’t be stressed enough: Start by completing a 13-week rolling cash flow forecast. This is the best barometer of the overall health and survivability of a business in the current environment. FFI has a free template and on-demand online course demonstrating how to do a forecast, so please take advantage of these tools.

For some businesses, their cash flow situation will provide a clear answer: It’s probably best to either push the pause button for a while or pull the plug entirely. And in many cases, there is no benefit to waiting, especially if the company is unable to find alternate sales channels, predicts continued supply chain challenges or does not expect demand for their products to return to business-sustainable levels post-pandemic.

As consultant Bartlett Durand discussed in our most recent podcast, there’s no shame in small businesses declaring bankruptcy. It’s simply a legal tool to address debts, protect certain assets and avoid spiraling downward any further. Bartlett explained the importance of working with a bankruptcy attorney to help negotiate with lenders.

However, other businesses may do a 13-week rolling cashflow and realize they have a real shot at staying afloat, albeit by making a few changes. Here again, it’s time to make those changes. Nobody wants to lay off hardworking staff, but it may be necessary. Figure it out and have those tough conversations ASAP. Similarly, no business owner wants to be late on payments, but if delaying a check one month would provide cushion to keep going and generate more revenue, talk to landlords and lenders now.

Also look at government relief options immediately, including the Small Business Administration’s Disaster Loan Program, CARES Act protections and newly amended unemployment benefits, paid leave and Social Security tax requirements. Check into state and local government assistance as well.

Even when food and farm businesses don’t know what’s the next best move, they should not sit idle. It’s time to start figuring out the company’s future. As always, FFI is here to help, so please don’t hesitate to reach out.

And now, our roundup of the best food and beverage finance news, events and resources from around the web…

Consultant With TabletBusiness Model Insights

Raising CapitalRaising Capital

National Wholesale BrandsCPG/National Brands

Grocery Store Produce Section Market Trends Regenerative AgricultureFarming and AgTech

Mergers And AcquisitionsDeals/M&A

COVID-19-Related Resources for Food and Ag Businesses