Small Business After COVID-19

April 19, 2020

People and businesses are anxiously awaiting for the “stay at home” and “social distancing” lockdown restrictions to come to an end. People are wanting to get back to work so they can pay their bills. Businesses are wanting to open so they can pay their bills and serve the needs of their customers.

When businesses are open again, will they be able to pick up right where they left off when they were forced to close?

This question has every small business owner and their employees staying awake at night worrying about future of the business and their personal finances. As a former small business owner for 32 years, I have these questions for current small business owners:

  • How did the pandemic lockdown effect your customer base? This is especially critical if the business targets a particular demographic.
  • If your customer base was particularly vulnerable during the pandemic lockdown, do you need to adjust your marketing strategies, products or services?
  • Do your payment options serve the needs of your customer base under the new realities?
  • What is the debt load of your business? Can your business meet your debt obligations until your business gets back on its feet?
  • What about your employees? Will you need the same number of employees or will you need to reduce your number of employees until your business gets back on its feet? How many of your old employees will not be returning?
  • Can your business stay afloat due to the lag time between the time the product or service is provided until the time you are actually paid? This is especially critical when your service is provided over time. (Example: a contractor)
  • How did the pandemic lockdown affect your competitors? Will you have fewer competitors? If yes, how can you attract the customers of those businesses that didn’t survive? Do you have a marketing and contact plan for those potential customers?
  • Are you, the owner, in the right physical and mental condition to rebuild your business? Don’t fool yourself — you will be facing a new, different marketplace. People and businesses went without income for a month or longer. Money will be tight. Every sale will take more effort than it did before the pandemic lockdown. If you need help, get it sooner than later.

For some small businesses, receipts for the first 90 days may only be 50% of what it was the 90-day period before the pandemic lockdown. It will take a while for business and personal incomes to start flowing through the marketplace.

My sincerest hope is that you are or will be one of the survivors! If you have been in business for a few years, you already have the knowledge and skills to get you through this time of uncertainty. All you need to do is put it to use.

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“I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.”
Steve Jobs

Life Under Change
Quotes that inspire, motivate and challenge us.

Economic Impact Payments and State Unemployment Benefits

Post Overview

  • Economic Impact Payments (Stimulus Checks)
  • How and Where to Check on Your Check (Payment)
  • Taxation of the Economic Impact Payments
  • Federal Taxation of State Unemployment Benefits

Economic Impact Payments (Stimulus Checks)

Good news! The payments/checks are being processed and sent. The payment for my wife and I was deposited into my checking account on 15 April 2020. The deposit for my wife and I was $2,400.

How and Where to Check on Your Check (Payment)

If you want to check the status of your Economic Impact Payment, complete the form on the IRS website. The form is simple and easy to use.

Taxation of the Economic Impact Payments

Your Economic Impact Payment is not taxable.

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Federal Taxation of State Unemployment Benefits

Fortunately, most people who lost their jobs due to the COVID-19 coronavirus pandemic are eligible to receive state unemployment benefits.

Any unemployment compensation received must be included in your income. You may also be required to make quarterly estimated tax payments.

Here’s how and when to pay estimated taxes. For state unemployment benefits, you make Federal estimated tax payments for income tax onlynot FICA taxes. (Social Security and Medicare)

Unemployment taxes are taxed in some states and not taxed in other states. Check with your state’s Department of Revenue. All states have a website that outlines what is considered taxable income. Making estimated tax payments to the state closely resembles that of the Federal government and both are easy to do.

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“Do what you can, with what you have, where you are.”
Theodore Roosevelt

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Quotes that inspire, motivate and challenge us.

The Coronavirus Economic Stimulus for Individuals and Families and Actual Monthly Rents (U.S.)

Image by Free-Photos from Pixabay

Overview of this blog post

  • Summary of the coronavirus economic stimulus for individuals and families.
  • Some key financial statistics of the average American family before the coronavirus pandemic.
  • Comparing the economic stimulus for individuals and families to the average cost of monthly rents across the United States.

Summary of the Coronavirus Economic Stimulus for Individuals and Families

The United States government is going to be sending you a check (via a deposit to your bank account on record with the IRS or an actual check if there is no record on file with the IRS) soon to counter the coronavirus-induced economic meltdown, the Trump administration and Congressional leaders worked out a massive economic stimulus plan that will flood the U.S. economy with cash and provide relief for Americans who are taking a financial hit. Part of the plan is to send almost everyone direct payments from the government’s coffers.

You will receive just one payment from the U.S. government.

You may have heard that stimulus checks will be for $1,200. That’s just the base amount. An additional amount of $500 will be paid foe each qualifying child. Since your actual check could actually be much higher or lower, use this stimulus check calculator to determine the amount of your check.

Some Key Financial Statistics of the Average American Family Before the Coronavirus Pandemic

Comparing the Economic Stimulus for Individuals and Families to the Average Cost of Monthly Rents Across the United States

Format: State (15 largest) / Average Monthly Rent for 1 Bedroom / Average Monthly Rent for 2 Bedrooms

  • National Average / $965 / $1,197
  1. California / $1,457 / $1,858
  2. Texas / $861 / $1,070
  3. Florida / $986 / $1,229
  4. New York / 1,296 / Pennsylvania / $830 / $1,027
  5. Illinois / $914 / $1,097
  6. Ohio / $667 / $857
  7. Georgia / $883 / $1,042
  8. North Carolina / $774 / $930
  9. Michigan / $725 / $927
  10. New Jersey / $1,263 / $1,550
  11. Virginia / $1,071 / $1,264
  12. Washington / $1,182 / $1,481
  13. Arizona / $874 / $1,105
  14. Massachusetts / $965 / $1,197

Analysis

The amount of money Americans will receive due to the COVID-16 coronavirus pandemic will cover the rent, in most cases, for a one bedroom apartment for one month for a single person. If you are married, the base stimulus benefit of $2,400 (combined for both adults) will pay for a 2-bedroom apartment for two months based on national averages.

While housing is the largest expense for most families, all the other household expenses typically exceed the cost of housing. Fortunately, those who have been laid off, furloughed, or lost there job entirely, will be eligible for enhanced unemployment benefits from the state.

But the real issue of the moment is when will you actually receive your stimulus check and how soon will you start receiving your unemployment benefits so you can start paying your bills and put food on the table?

The electronic deposits to bank accounts have already started for the economic stimulus. If you are waiting for an actual check, you may have to wait for up to 5 months.

Regarding your enhanced unemployment benefits, you should start receiving your benefits once you have filed, your unemployment is confirmed and your application is approved. The states are under extreme pressure to process your unemployment claim and make payments quickly.

Final Thought

As the COVID-19 coronavirus pandemic has shown us, emergencies come without notice or time to prepare. This is why everyone needs to have an Emergency Fund of at least 3 month’s of bring-home income. There’s no time like the present to get started. You’ll never get started if you wait until it’s convenient. Start as soon as you can and remember that “a little bit often adds up to a lot” over time.

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“Any fact facing us is not as important as our attitude toward it, for that determines our success or failure. The way you think about a fact may defeat you before you ever do anything about it. You are overcome by the fact because you think you are.”
Norman Vincent Peale

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Prioritizing Your Bills When You Lose Your Job

The information provided in this blog post is not specific to jobs lost due to the COVID-19 coronavirus mitigation efforts by government agencies. During this period, your country, state or province, and city have special programs available to assist those who have lost their job due to the COVID-19 coronavirus. The specific information for your locale is widely available on the Internet. Please refer to and utilize those resources. Helping you during this time of insecurity is their top priority.

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There are numerous causes for losing your job and many are beyond your control. Regardless of the cause, losing your job nearly always results in the reduction or total loss of your income. Following that, you will most likely have a hard time paying your bills.

What do you do when your expenses exceed your income?

Quite simply, you need to prioritize your bills. Which bills must be paid. Which bills can you put off until you are on better financial footing. In prioritizing, you need to keep in mind some necessities of life:

  • Shelter
  • Food
  • Water
  • Heat

Bills You Need To Prioritize

Although you can make some adjustments to the order you pay bills based on your circumstances, it’s usually best to focus on paying your housing bills first, then paying what you can with the money you have remaining. So, let’s take a look at a sample prioritized list:

List At a Glance

  • Mortgage or Rent
  • Utilities
  • Food and Household Necessities
  • Insurance Premiums
  • Car Loan
  • Unsecured Loans
  • Student Loans

List Details

Mortgage or rent. If you fall behind on mortgage payments, you risk having the lender foreclose on your home. If you fall behind on rent, your landlord can evict you. Even though the foreclosure or eviction process can take months, it’s not something you want to risk happening.

Utilities. This typically includes gas, water and sewage, and electricity. The Internet may be included if it is needed for job search. Contact the utility company if you are having trouble making the payment.

Food and household necessities. Food, soap, and paper products are up there with shelter, heat, and hot water on the list of essentials. Here are some helpful tips in controlling this expense:

  • Make fewer trips to the grocery store
  • Buy store-brand products
  • Limit your purchase of packaged food products
  • Stop buying bottled water
  • Buy in-season fruits and vegetables

Insurance premiums. Having insurance is always smart because it provides financial protection against the worst things life can throw your way, such as illness, fire, or accidents. Paying your insurance premiums even when money is tight is a smart move.

Car loan. Your car gets you to and from work and lets you get to other important places, such as your kids’ school, the grocery store, and the doctor. If you have a car loan, it’s crucial to find a way to pay it each month. If you are unable to make your payments, contact the lender to let them know and ask for help.

Unsecured debt. Although you should make every effort to repay your debts, when money is tight, unsecured debt, such as credit cards and personal loans, should move to the back burner. While these debts typically have the highest interest rates, they also have the lowest impact on your daily life. You need to at least make the minimum payment. If you can’t, contact the lender.

Student loans. While you should make every effort to pay your student loans when money’s tight, the loans often have the most flexibility when it comes to repayment, particularly federal loans. Contact the lender if you cannot make your payments.

It needs repeating. If you are unable to pay a bill or loan payment, contact the company and let them know your circumstances and your desire to pay what you owe them. Most companies will work with you … as long as you contact them. The worst thing you can do is to not contact the company and just ignore the bill.

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You eat every day to nourish your body,
you also need to nourish your mind and soul

with positive inspiration and motivation.

Coping With Unemployment Due to Covid-19

Image by Ulrike Mai from Pixabay

“COVID-19 represents the single greatest inflection point that global society has experienced. How we manage through this pandemic and its aftermath will impact the course of humanity for decades to come.”
Tom Golway

Millions and millions of workers across the world are losing their jobs due to mitigation efforts of governments to slow the transmission of the COVID-19 coronavirus. Not since the Great Depression have so many people been out of a job and unable to support themselves and their families.

If you are one of those unemployed right now, my heart goes out to you. I have shed more than one tear contemplating the physical, mental and spiritual pain you are going through during this very uncertain time.

As uncertain and brutal as the situation is, all of us must learn how to cope and make it through this unearned personal tragedy. In hopes of offering a few ideas on how to survive until you can see light again, consider the following as you are able:

Save Your Money

  • Put together a budget. Start with your basic necessities like rent (mortgage), groceries, insurance, and utilities. Next, list expenses that are important but non-essential. These might include cable TV, eating out, alcohol, and entertainment. Add up the amount you spend on necessities and add it to the amount you spend on non-essentials. This number represents your current monthly expenses.
  • Cut back on unnecessary expenses. Look for ways to reduce or eliminate non-essential expenses like eating out, manicures, memberships, subscriptions, and cable TV.
  • Reduce your expenses on essentials. Use coupons, look for sales and ask for discounts. Check with your cell phone, internet and cable TV carriers to make sure you are getting the best deal possible based your use.
  • Ask about loan deferment programs. If you have credit card bills, car payments or student loans, call the loan companies and ask if you can reduce your monthly payments, or delay them entirely until you can get back to work once the COVID-19 mitigation restrictions are withdrawn. 
  • Apply for unemployment. If you lost your job due to COVID-19 mitigation programs, you are eligible for unemployment benefits.

Manage the Emotional Impact to Your Life

  • Have a routine. Get up early and have a to-do list of what you want to accomplish for the day. Staying in bed until noon and watching TV all day is unhealthy for your physical and mental well-being. Get outdoors for some exercise and sunlight for a natural lift-me-up.
  • Stay in contact with your family and friends. They are your support system for encouragement and empathy during this difficult time.
  • Ask for help. If you are unable to control melancholy and depression, seek help from your friends, family or your local mental health center.
  • Reduce or eliminate your use of alcohol and other drugs. Though they may provide temporary relief from stress, they tend to increase stress in the long-term. Alcohol is also a depressant, so you should avoid drinking too much during a time that you are feeling low already.

You will get through this.
We care about you and your well-being.
Know that you are loved!

Money Management

“Many people lack discipline when it comes to saving money. What good is having a bunch of stuff if you’re struggling, in debt, or broke most of the time? So many people put up a front like they’ve got it going on, but they know the truth. They spend all of their money trying to look important, and/or keep up an image. Knowledge is everything! Educate yourself about money, investing, and saving. I encourage you to start investing in yourself instead of things! Set yourself up for a better future and start making better choices. Building wealth takes time! Have discipline. Save. Stay consistent. Be brave enough to change your spending habits. Be wise! Don’t allow money to control you. Strive to have a healthy relationship with money!”
Stephanie Lahart

Life Under Change
Quotes that inspire, motivate and challenge us.

Small Businesses Need an Emergency Fund

Image by Free-Photos from Pixabay

Due to COVID-19 and the once-in-a-lifetime restrictive measures being taken by government authorities (national, state and local) in an attempt to slow the transmission of the virus, many businesses will not survive to see the other side when the business environment gets back to providing customers with the products and services they want and need.

The undeniable situation is that most businesses cannot continue operations when they are not allowed to be “open for business” to serve the needs of the consumer.

As small business owner for over three decades, I realized how vulnerable my business was to a downturn in business when compared to the large multi-national corporations. As such, I realized that I needed a “business emergency fund” just like a family needs an emergency fund for unexpected large expenses or a loss of income.

What exactly is a business emergency fund?

Emergency funds, also known as “rainy day” funds, are cash supplies kept on hand so a business can keep operating in lean times or in the event of an emergency. Not only do these funds enable companies to keep providing services while paying their employees and suppliers, but they can also allow owners to continue supporting their families.

What are the basic components of a business emergency fund?

Accidents and disasters happen … and they can happen at any time without any advance notice. While we cannot predict what or when an emergency may occur, we can be prepared by taking steps necessary so the business can continue operations. To make sure this will happen, we need to plan based on the “worst case” scenario.

The first step in establishing a business emergency fund is to analyze your business so you can properly determine how much money is needed for your specific business emergency plan and over what period of time. Some things to consider are:

  • What expenses will be necessary to continue business operations?
  • Will you need to retain current employees? Will you need fewer employees during a time of emergency operations? Will you need more employees?
  • What additional expenses will there be?
  • How and where will you serve your existing and new customers? How will you communicate with existing and potential customers?
  • If the business emergency requires you to secure or build a new location, will the new location be suitable for the growth of the business? Will the new location serve the convenience needs of your customers?

Your business expenses will not cease simply because you are in the grips of a business emergency. You need money. Under many business emergencies, it will be a period of time before you are able to be operational again. For most businesses there are three ways of meeting your financial obligations during the business emergency period:

  1. Insurance if the cause of the emergency is insured under your business policy.
  2. A business loan may be available.
  3. You have a business emergency fund set aside and ready to use.

Ways to fund your Business Emergency Fund

Okay, you are convinced that you need to start a business emergency fund. That was easy. Now you have to find ways to fund it. That’s not so easy for many small businesses. Let’s look at a few ideas:

  • Look for ways to cut expenses. Are you spending money for something that is failing to give the expected rate of return you expected?
  • If you have a large order or sale, set a portion of the profit earned from that large order towards your business emergency fund.
  • Do you have any assets you are not using? If yes, consider selling it. Examples may include a vehicle or a building.
  • Can you add a product line or offer an additional service to generate additional income?

Choose the right type of account

As the name indicates, the money in a business emergency fund needs to be liquid so you have access to it immediately when the need arises. Your money also needs to be safe. Hence, short-term CDs, savings accounts or money market accounts are best suited for “holding” your business emergency fund.

The economic turmoil we are going through right now clearly illustrates why it could be a disaster to place your emergency fund in stocks or stock mutual funds. The last thing you want to do in a financial environment similar to what exists today is to redeem your stocks or shares in a mutual fund when the market is tanking. That’s a guaranteed loss of money.

Final Thoughts

I owned a small business for 32 years and sold it 2012 to retire. I had a business emergency fund that was adequate to continue business operations for 10 months based on the expenses of the business at the time of an emergency. The amount of money needed was reviewed annually to make sure the emergency fund was adequately funded.

I was fortunate in that I was able to fully fund my business emergency fund over a 3-month period due to a large one-time sale. I used a money market fund with check writing privileges for my funding vehicle.

I was lucky in that I only had to “tap” funds from this account once and I was able to replace the money withdrawn within 6 months. Had I not had this money available, I would have been in serious financial trouble.

Penny Picker-Upper

Okay, I’ll admit it. I am guilty of picking up pennies off the ground whenever I see one. I see them all the time in parking lots and along the walkways when I take a walk. Why do I do this since one cent won’t buy anything?

I’ve attempted to explain the “why” to people who ask me about this often dirty habit. Though most people don’t “get it”, I’ll attempt to explain it to you, my readers.

Penny picker-uppers don’t pick up a penny for its money value of one cent. Rather, the value of that penny comes from the act of picking up the penny.

  • It’s a reminder that every penny counts.
  • It’s a reminder to be frugal and thrift … even with the little things.
  • It’s a reminder that the little money decisions we make add up to a lot over time.
  • It’s an act of acknowledging the down-the-road benefits of managing our money.

In the end, that 1-cent penny provides a value far beyond its face value.

Frugal Opportunities

There have been three DYI (do-it-yourself) opportunities at home this week that allowed me to choose frugality over unneeded spending by hiring someone else to do the work.

  • I repaired three leaks on a ceramic tile roof and re-plastered and painted the indoor ceiling where rain water had leaked through. I was able to do the repairs myself instead of calling a handyman or contractor.
  • A sink in one of the bathrooms started leaking at the valve where the water comes from the wall to the hot and cold water pipes going to the sink. I was able to replace and install the water valve myself instead of calling a plumber.
  • My wife wanted a window shelf to put between the laundry room window and the washer and dryer to store detergents and other laundry supplies. Since it was an odd size, the cost to have one made was $42 plus $40 for the installation. Instead, I used some spare chipboard we had stored. I cut the board to the exact measurements and attached the shelf with handmade wood brackets to the ceramic tile wall.

I don’t know how much money I saved on these three projects but I’m sure it was hundreds of dollars. My cost was only $4 for two drill bits for going through ceramic tiles. All other materials and hardware were from my own stash of materials and parts I had purchased over the last 35 years at garage and estate sales.

Besides saving money, I had fun doing them. Isn’t that what being frugal is all about?