Business Strife and Pandemic Aid: JumpScale Weighs In
Originally published in Times Record News:
Expert: Businesses in trouble without federal aid
Claire Kowalick | Wichita Falls Times Record News
As Americans continue to struggle with the rising cases of COVID-19 which are expected to worsen through the winter, more ominous, still, is the long-lasting economic effects of the pandemic – especially as talks of a stimulus package for individuals and businesses is at a standstill with the federal government.
Josh Knauer, a leading business strategist and co-founder of JumpScale, a wellness-focused business consulting firm, said American businesses and individuals need help immediately if there is going to be any chance of economic recovery in the future.
An aid package to truly address the needs of struggling businesses, Knauer said, would have to offer at least six to 12 months of support for businesses to regain the stability and predictability needed to grow the economy.
While dollar figures on proposed aid packages seem staggering, Knauer said the amounts are miniscule compared to the economic damage to society if these businesses do not get help.
Before the economic recovery, however, Knauer said the country needs a unified program to attack and control COVID-19 and said businesses have little chance of recovery until the health aspect of this situation is tackled.
“We need businesses to be supportive of public health research and data that shows wearing masks help stop the spread of the coronavirus,” he said.
Regaining customers depends on several factors including confidence in the health safety of locations and overall confidence in the economy.
With the pandemic unlikely to disappear anytime soon, businesses that best adapt to COVID conditions may have a better chance of survival.
“Asia and Europe really understood that before an economy can recover, they need to address the spread of the disease (COVID). Other countries have come together across political lines to defeat the common enemy, COVID, with mask wearing and contact tracing,” he said.
In many of these countries, Knauer said citizens had some form of guaranteed income so they were not pressured to go back to work and could weather strict lockdowns without fear of financial ruin. Pausing businesses for a short while was acceptable, Knauer said, due to programs that offered help during and after the pandemic.
He calls the United States response to the pandemic “haphazard” and “chaotic” with no centralized leadership from the White House on down.
A plan to lay most of the onus on state governors created a patchwork of widely varying responses.
While some governors attempted a science-based approach with strong COVID regulations, other governors, Knauer said, focused on economic recovery in spite of rising COVID cases, hospitalizations and death.
“The economy did not have to collapse as it has. A stimulus package needs to happen immediately or we will see millions of business cease to exist. Large and small,” Knauer said.
Companies that received Paycheck Protection Program or other loans early on are quickly running out of those funds. This quarter, October through January, Knauer said, is likely to be the most economically catastrophic time since the pandemic started.
Knauer said local leaders and community members should rally with petitions and letters to their state governors and other officials.
Some officials have proposed breaking apart the thick stimulus plans and instead simply offering another $1,200 check to most Americans.
Knauer said while immediately that funding is helpful, it will really only last about a month for most families.
“We have to fix the chronic unemployment. Some stimulus directly to people is beneficial, but we also have to have a comprehensive plan for those who are losing their health care, their homes and their hope for the future of all their savings. It’s a very significant problem and it leads to serious economic repercussions far beyond what we are seeing now,” he said.
With the possibility of a stimulus plan unlikely in the next few months, Knauer urges small businesses to make sure they are doing everything possible to strengthen their position and maintain good working relationships with financial intuitions and vendors.
Knauer said a weakness for many small businesses is they lack the established relationships with banks and when catastrophic events – like a global pandemic – hit, they do not know how to work the system to their advantage like some larger organizations.
Knauer said the PPP loans under the CARES Act were the first time Small Business Administration loans went through private banks and there was little thought put into the fairness and equity of the loans’ distribution.
Subsequently, massive loans were snapped up within hours, leaving many small businesses without a chance for the funding. Knauer said the uneven distribution meant woman-owned businesses and businesses owned by people of color were 90 percent less likely to receive a PPP loan.
Without an additional stimulus package, Knauer said mid-tier consumer product and services organizations are most at risk because they tend to have poorly structured financial systems and run with extreme amounts of debt.
Also at risk are small businesses who have not figured out how to adapt to the current models of commerce in the COVID era with social distancing, virtual shopping and delivery.
“If they have not adapted already, it is very late to even try,” he said. “Some businesses operated on the belief that things were going to get better. They were not prepared financially or (prepared to) get services to market while being COVID-aware. They might be in very big trouble,” Knauer said.
Other repercussions the economy will feel in the coming months is the domino effect of businesses that rely on other businesses staying open.
For example, as many employees work at home and exit city centers, restaurants and service that catered to those clientele could suffer.
People are traveling less for business and pleasure so rental car and corporate fleets could be liquidated to recoup costs.
In the short run, this could mean good deals on used cars for consumers, however the flood of cheap vehicles could hurt new car sales at auto dealerships.
Funds are scare at all industry levels, but Knauer urges business owners to take a good hard look at expenses and expected income and see what can be scaled down.
Unfortunately, employees are the most expensive part of a business so they may have to consider who is essential and who can be laid off temporarily or longer.
Knauer encourages businesses to renegotiate any loans with banks and speak with financial advisors on how they could solve their problems.
Business owners tend to not negotiate with vendors, Knauer said, but said business owners should explore every option and keep the lines of communication open with vendors.
“Businesses should understand that we are going to be selling in this manner (with COVID regulations) and they need to comprehend the fact that we will be in the same position a year from now. There is not going to be any magical cures. They are going to have to take time in planning out and adapting products and services in the age of COVID. If there is no other help, everyone has to understand this in order to survive,” he said.
More information about JumpScale is available at https://www.wejumpscale.com.
Claire Kowalick, a senior journalist for the Times Record News, covers local government, military and MSU Texas. If you have a news tip, contact Claire at ckowalick@gannett.com.
Twitter: @KowalickNews
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