Optimizing Your Business for the New Economic Paradigm
This year of seismic change has many business leaders wondering what’s next. It’s impossible to know the future exactly, of course, and very little about the “new normal” is likely to be normal, but it’s vital to plan using the most informed advice available to plan for the new economic paradigm.
For that reason, we invited Trey Gailey, Director of Accounting at BlueStone Services, LLC to discuss the top three challenges businesses face in this new economic paradigm. Trey’s presentation at a Think Virtual Whiskey Wednesday event was informative and very well received by the attendees. Here’s a synopsis:
From Trey’s perspective, the top three challenges business owners are encountering are:
- Compliance with COVID government assistance programs
- Adapting to a remote working environment
- Cash flow management: cutting costs and/or generating revenue
Let’s take a closer look at each.
Compliance with COVID Government Assistance Programs
When the pandemic first hit, the need for quick action on the part of the federal government overrode the need to nail down every detail. Rules and guidelines for the Paycheck Protection Program (PPP) and the SBA’s Economic Injury Disaster Loans (EIDL) were unclear, and in some cases even changed post-launch, causing widespread confusion for business owners (and long nights and weekends for business owners and commercial bankers).
While that initial chaos has subsided, there are still some unknowns, and in fact the rules still seem to be “changing by the minute,” to use Trey’s words. Most prominent among the uncertainties is the question of loan forgiveness for the PPP and other COVID relief funding.
The good news is that most of the changes to rules and guidelines have tended towards leniency (for example, an expansion of the window to use PPP funds to 24 weeks), but there’s no clear resolution yet. Final guidance on loan forgiveness is expected by the end of calendar year 2020; Trey advises waiting for that clarification before filing for loan forgiveness. Needless to say, tracking expenses related to PPP and EIDL is critical.
Business owners should also note that the forgiven portion of PPP loans is not taxable; however, the expenses claimed with those funds are also not tax deductible. It is recommended that you discuss this further with your tax professionals.
Adapting to a Remote Working Environment
The work-from-home (WFH) environment has been a multi-faceted challenge for many businesses, presenting both technical and cultural hurdles.
On the technical front, many businesses were simply not prepared to conduct operations remotely. Most have adapted by now, and the result has been boom times for cloud-based services and managed IT services providers.
WFH has also presented new and sizable exposures for business owners as hackers have found a perfect storm of opportunity. Many employees continue to use personal devices to conduct company business, with less than perfect security protocols. And on the social engineering front, the pandemic has offered openings for phishing attacks disguised as messages related to government relief programs, contact tracing and the like.
Just as challenging for business leaders has been the task of maintaining and improving company culture in a WFH setting. Not only do video meetings rob us of many nonverbal cues, team members are often distracted by their new duties as home-schoolers or caring for elderly relatives.
Participants in other peer groups have indicated that their best weapon against the deterioration of culture has been communication. It’s important to recognize that not only are employees distracted and anxious about the future, they’re not privy to much of the decision making that’s happening and the reasoning behind it. The more information you can share with your team, the better your chances at maintaining a positive culture and engaged employees.
Cash Flow Management
While restrictions on gathering and working in person have eased in some locations, there remains no defined end in sight for the pandemic. With that in mind, Trey laid out five considerations for any business at this uncertain time: cash flow, mission, philosophy, products and services, and key achievements.
Cash flow is obviously the lifeblood of any business, and actions taken to reduce costs or increase revenue are welcome at any time, but especially vital now. Trey pointed to two main areas of cost-cutting focus: outsourcing operations such as IT and accounting; and reassessing the need for physical office space.
For the revenue enhancement side of the equation, now is the time for a complete top-down look at your organization, from its mission and philosophy to the products and services you offer. Are all of those still viable now and post-pandemic? Is there an opportunity to add products or services, or to pivot completely, and make your organization even stronger? Companies that approach this assessment with creativity and an innovative mindset are most likely to succeed.
Finally, Trey shared a comprehensive online resource for COVID-19 information for businesses, compiled by BlueStone’s parent firm, KatzAbosch. The page contains tools and information ranging from legislative updates to loan forgiveness calculators, as well as the opportunity to subscribe to future updates. See it here.
Director of Accounting at BlueStone
About Trey Gailey:
Trey Gailey is the Director of Accounting at BlueStone Services. BlueStone Services provides organizations with outsourced solutions for their accounting, HR, and payroll needs. In his role, Trey oversees the BlueStone team with developing client financial reports, strategies and routine support processes for the long-term financial goals of their organizations. He performs outsourcing accounting services to a wide variety of industries, with clients in the US and other areas of the world. Trey is also a principal at BlueStone Services’ parent company, KatzAbosch, a regional CPA and business consulting firm. For more information on BlueStone Services, LLC please visit: www.bluestonesvc.com