The other day I started thinking more and more about the state of the economy and what makes today different from every other recessionary period we have experienced in the past 50 years. I remember in the late 70's we were dealing with an oil shortage. What I remember most about that time was I thought it was fun. We got a bunch of friends together, and at 4 am in the summer we would meet on line at the local gas station. Based on our license plate numbers and odd even day schedule, we would gas up. Our parents were happy because they didn't have to wait in those long lines. After a few hours in line and when our gas tanks were filled, we'd all go out for breakfast at the diner and then back to sleep for a few hours before we'd meet up later at someone's house to hang out. After about a year of this ritual, gasoline just magically appeared and the recession was over. (Well that's not exactly accurate, but that is how I remember it.)
A few years after getting out of college, I worked for a wholesale garment company as a financial controller. The fashion and garment industries in the 1990's struggled. The buzz in the office was always about which one of the federated department stores was going to go out of business. There was a feeling of uncertainty for our jobs. Stores were requesting more markdown money and sales orders were not coming in. The writing was on the walls, but the owner's of the business I was working for had waited too long to initiate the needed changes to weather the storm. In the end, they were forced to close their own doors. I really loved that job and still have great memories about the owners and my coworkers. It was a fun place to work, and although I was unemployed and concerned how I would make my monthly mortgage payment, I was excited for new opportunities.
Fast forward to today, after over 10 years of owning an accounting firm and many career opportunities, I have not forgotten those difficult periods of time or my state of mind during them. Recessions are cyclical and we will be in this one for some time, but pivoting now is essential and how you embrace it will make a difference. So why during this pandemic and this 2020 recession period does it seem so different? What makes it so different for businesses? As I pondered this question, since 5 am this morning, I came to the conclusion. In terms of a recession, it's not different, it's just the catalyst that got us to this recession that makes it different. We are feeling the strong financial impacts and uncertainty, the government has intervened to help fix it and we are all hyper-focused on when we will get out of the downward spiral so we can come back on top. The future is currently uncertain, especially for small business owners, but your state of mind and willingness to pivot during this time is extremely important.
This pandemic and the related recessionary impact isn't going away tomorrow and is going to leave a lasting impression on us all. The increase in debt is going to be a constant reminder, especially for those businesses who applied for PPP and EIDL loans. At SMA, we have worked with over 30 of our clients securing SBA related funds for them and advised them appropriately about these loans and related business risks. I am sure there are many small businesses out there that should never have taken loans because they were not sustainable prior to the pandemic and these loans were not going to change that.
When thinking back to the beginning of April, during the first round of PPP funding, I compared it to what I thought it must have felt like during the Great Depression time, a run on the bank mentality. Small business owners were in a state of panic about getting in applications on time before funds ran out. I also compared it to the movie It's a Wonderful Life. In my head, I see that one scene where the people from town were running into the bank because they thought the bank was going to run out of money. What did it feel like to you? Do you still feel that way?
How well you handle change or how well you can pivot when change is thrown your way says a lot about how you will navigate your business during this recessionary time. Do you have various plans ready to implement for these uncertain times or do you like working in a chaotic environment? Can you easily change course and lead your business in a moments notice. Does change make you freeze? Do you feel like you second guess all your business decisions so you do nothing? Are you afraid of change and really don't understand what it means to pivot? Do you have anyone you can express your concerns with that understands and can help? Do you understand your finances?
If what I have been discussing resonates with you and you are ready change your state of mind and pivot, we are here to help. We are helping clients make informed financial decisions utilizing strong financial processes, strategy, client education and communication. This is not an overnight fix, but rather a process that works if you are open to change.
Our Accounting / Controller package is meant for small businesses:
Looking to understand their business financials
Needing formal processes
Needing better accounting / bookkeeping resources
Needing fractional controller assistance
Looking for assistance navigating financially.
This package includes the following:
Initial financial health checkup
2 - 1 hour monthly sessions with a SMA Controller who facilitates the strategy / education sessions
Financial Metrics / Scorecard
Monthly bookkeeping / accounting services
Controller oversight of the financial books with a designated staff accountant or bookkeeper on the team
Monthly financial reporting and review of related reports
Accurate Balance Sheet and assistance in clean up
Monthly mentoring to help you achieve a 10% net income return or better, 6 months cash in the bank, gross margin % related to your industry standards, assistance in budgeting, forecasting and pricing
SMA proven process and strategy
See our sample pricing sheet on our website for more details or call us at 908-888-2509 for further details. We offer other plan options based specifically on your concerns and needs.
Wishing everyone the best of health both personally and financially,