A couple days ago we circulated a Client Alert to address the possibility of invoking “force majeure” clauses in your contracts, and assessing how to handle your customer and vendor contracts. This is now on our website and can be viewed
Here are some additional tips:
1.) REVIEW YOUR INSURANCE POLICIES AND CONTACT YOUR INSURANCE AGENT TO SEE IF YOU HAVE COVERAGE THAT MAY HELP YOUR BUSINESS.
For example, it would be beneficial to know whether you have
business interruption insurance
that could provide funds to bridge lost revenue. Lenders often require this coverage, so you may have it. Business interruption insurance is insurance coverage that replaces income lost if business ceases for some reason, such as due to a fire or a natural disaster. This type of insurance also covers operating expenses, a move to a temporary location if necessary, payroll, taxes, and loan payments.
Perhaps you have
supply chain insurance
, which is primary for non-physical damage events and resultant business interruption. Coverage is for business interruption as a result of disruption or delay in the receipt of products, components, or services from a named supplier or supply. Supply chain insurance can cover losses caused by a wide range of events, including, but not limited to:
- Natural disasters;
- Industrial accidents;
- Production process problems;
- Public health emergencies, e.g., pandemics requiring quarantine; and more.
Please keep in mind that we are in unprecedented waters, and, unfortunately, most policies will not pay business interruption for Coronavirus related losses because coverage for business interruption is usually only triggered when there is an insured loss to a covered property that inhibits your ability to run your daily business.
However, it is always best to contact your provider directly to get the applicable information. With mandated government shutdowns, these are times when coverage may be triggered even without damage to physical property.
2.) EVALUATE ALL SOURCES OF CAPITAL – AND ASK FOR MORE BEFORE OTHERS BEAT YOU TO IT.
Not only should you learn who will be offering lines of credit, but you should take the proper steps to get the proper information that may be required.
Our lender, First Citrus Bank, recently posted an invitation to contact founder and President Jack Barrett at First Citrus Bank at 813-269-5414 for information on a short term bridge loan, as the First Citrus Bank is on standby to assist the Tampa Bay area.
If you have investors, you should be communicating with them at least once a week. Be transparent about your circumstances, and tell them what you need. It is their investment too that needs to be protected through proactive measures.
The bottom line is that others will ask for money from the lenders and investors who have it. The well may run dry if you are the one to hesitate.
3.) NEGOTIATE PAYMENT TERMS
Don’t be afraid to negotiate with vendors and landlords for extended payment terms, or perhaps reduced interest rates. Even a short reprieve could have a big impact on your business’ ability to stay alive. Be reasonable and fair, and honestly communicate what you can and cannot do in terms of meeting your obligations.
4.) SHOW YOUR SUPPORT
These are times when compassion and concern goes a long way. Reach out to your vulnerable customers, vendors and especially employees to show you care about them. People remember who came through for them in the tough time.
For more information on how you can better protect your business,
and remember to follow-up on Social Media for important firm updates.