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Coping with the COVID-19 crisis: What small businesses can do

Small business owner cleaning off surfacesIf you do have some operations running, it’s important to follow health and safety protocols to ensure a safe environment for all (Getty Images/ filadendron)

Closures, reduced hours, layoffs—as the COVID-19 crisis continues to evolve, businesses are doing the best they can to navigate the unknown. But the situation is already proving devastating for many.

As Jasmin Guénette, VP of national affairs at the Canadian Federation of Independent Business, points out, “Thirty per cent of small firms say they can survive less than a month in the current situation.”

Fortunately, the federal government has been introducing a rapidly expanding array of measures* designed to provide relief to small businesses and individuals.

But if you are on the front lines of the impact, here are some of the actions you can and should take for your financial survival and peace of mind.

CHECK YOUR RESERVES AND INSURANCE

As Guénette suggests, you should talk with your accountant about your cash flow and reserves and how they can be used. “Also check your insurance policy to see if there is anything that can be covered in terms of lost income,” he says.

Mark Jones, FCPA and partner at Olafson & Jones in Winnipeg, agrees. “Some owners have business interruption insurance but now that we are dealing with a pandemic, it doesn’t count. However, some small businesses have pandemic insurance. There is a difference and it’s important to speak to your insurance agent.”

TALK TO YOUR STAFF

Have an honest conversation with your employees about what you are hoping to do to keep them on the payroll—and what you may be forced to do. “As the old saying goes, ‘Communication is key,’” says Guénette. “And in the current situation it’s even more true.”

BRAINSTORM IDEAS

“This is a situation where it’s a little bit out of the control of the business owner, because the government is asking businesses to shut down,” says Guénette. “So maybe some of your employees have ideas about how you can do things differently. They are smart people, so try to involve them—try to involve all your departments.” 

WORK AT HOME IF YOU CAN 

In some businesses, it’s possible for employees to work at home. In fact, as Blair East, a Vancouver-based CPA, puts it, “This virus may well be a game changer when it comes to remote work.”

REDUCE HOURS

For some businesses, scaling back might be an option. For example, while not a small employer, Loblaw CEO Galen Weston announced that they are reducing hours “to give our teams extra time to clean, and to rest…And we’re limiting the number of customers allowed in our busiest stores.”

LOOK AFTER YOUR WORK SPACE

If you do have some operations running, it’s important to follow health and safety protocols to ensure a safe environment for all. For example, as Mugsie Prodor of Edmonton boutique Red Ribbon explained, “We are practising cleanliness here.” [See COVID-19 and the workplace: What employers and employees need to do]

TALK TO YOUR SUPPLIERS AND LENDERS

As Jones points out, you should talk to your suppliers and landlords about stretching payment. “Be open and explain the situation to them. Also talk to your lenders to see what you can arrange—banks are definitely stepping up,” he says.

SHUTTING DOWN? GOVERNMENT SUPPORT CAN HELP

For many businesses, the only way for them to earn income is in person, explains Guénette. “So if the government is asking businesses to shut down or scale back, you’re eventually going to need to lay off some employees temporarily and rely on the government to provide an adequate program,” he says.

Among other benefits, you and/or your employees might be eligible for support under an emergency federal bill that was passed by the senate on March 25.   

It includes a new benefit dubbed the Canada Emergency Response Benefit (CERB), which will provide $2,000 a month in direct support to people who lose their income because of COVID-19. This new aid replaces the two benefits announced on March 18 and allows employers to retain their employees, rather than lay them off.  Starting April 6**, it will be possible to apply online for the CERB. If you receive this benefit, you won’t be able to receive the wage subsidy below.

TAKE ADVANTAGE OF BUSINESS SUPPORT

You may also be eligible for a a number of measures designed to support business (in addition to the CERB). These include:

  • A 75 per cent wage subsidy for small- and medium-sized businesses as another option instead of the 10 per cent subsidy. The subsidy will be backdated to March 15.
    Funds will be available within six weeks and businesses will be able to apply online at the CRA portal. They will need to attest they are doing everything possible to pay the other 25 per cent to employees.
  • The Canada Emergency Business Account: Banks will offer government-guaranteed loans of $40,000 to qualifying business. These will be interest-free for the first year. Under certain conditions, $10,000 will be forgivable.
  • A deferral in GST and HST and duties and taxes on imports until June.
  • $12.5 billion will be made available to Development Bank of Canada (BDC) and Export Development Canada (EDC). Businesses will be able to apply for guaranteed loans through financial institutions.

LOOK FOR GUIDANCE

Through the new Business Resilience Service (BRS)***, you can connect with experienced business advisers—including 125 CPAs across the country—for guidance on everything from deciding which government relief programs will be most appropriate for your needs to reshaping your business in the face of COVID-19. The four-week bilingual hotline service was launched on May 25 and is supported by the Government of Canada.

KEEP COPING—AND BE PREPARED

“Entrepreneurs are super-smart people,” says Guénette. “They are dealing with the repercussions of COVID-19, thinking about the situation and looking at what they can do to minimize the negative impact. For those that are able to stay open, try to think ahead, talk to your business partner and employees, make plans and be prepared as much as you can.”

CONSULT AUTHORITATIVE SOURCES

To help you plan, there are a number of useful resources geared to small business:

THINK HOW YOU CAN HELP

Even when facing a dire situation themselves, some entrepreneurs are looking to help others. As Jones explains, “I’ve heard of a few restaurants that are saying, ‘We’ve got to close. But we have all this food—let’s all stay and prepare the meals.’ And they are donating them to people in need.”

MORE COVID-19 UPDATES

Stay up-to-date with the latest news related to the accounting profession, including a compilation of external resources and online news articles.

Also, read more about what employers and employees need to do to keep everyone at work safe, and how to stay clear of scams related to COVID-19 pandemic.

*This article was updated on March 27, 2020, to include information on the enhanced financial measures for small- and medium-sized businesses.

**This article was updated on April 1, 2020, to include details on the Canada Emergency Wage Subsidy.

***This article was updated on June 2, 2020, to include information on the Business Resilience Service hotline.

GETTING CREATIVE

Here are some of the ways businesses and other organizations are adapting to cope with COVID-19.

NEW TWISTS ON TAKEOUT
OpenTable has partnered with Caviar, Postmates, Uber Eats, and other services to facilitate delivery and takeout at restaurants on the OpenTable network. And one reader suggested in an article about takeout that restaurants should try food trucks. “[They] can drive through neighbourhoods and practise safe distancing and promote funky meals or just coffee or fries or whatever!”

MOVING BUSINESS ONLINE
Amy Vetter, a US CPA who specializes in technology advisory services, is offering online classes at her yoga studio. As she says on her website, “Bring your kids, dog and cat and your yoga mat and meet us virtually!”

REALLOCATING STAFF
Some restaurants in Manitoba that are turning to takeout and/or delivery are getting their staff involved on the delivery side, says Jones. “This is keeping them busy; it’s keeping them employed,” he says.

SWEETENING THE GIFT CERTIFICATE
The Storm Crow, a business behind science fiction-inspired bars in Vancouver and Toronto, is offering a $5 “loot card” for each $50 online purchase in gift cards.

TAKING DONATIONS
Some organizations that rely on donations even in normal times are now making special appeals. For example, the Scott Mission in Toronto usually accepts food; but at the moment, it is asking that people donate money online, by phone or by mail so that it can purchase needed supplies.

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