Don’t Put Your Faith in Government Bailouts

If you're a small business owner, only YOU can bail your business out. Stop waiting on the government's promises and start cutting your highest expenses.

Can we be real? Are you patiently waiting for the COVID-19 debacle to pass? Are you waiting on the government for bailout checks to help your business through these rough times? If you are, then I hate to break the bad news, but your business will be lucky to receive any loan amount. And even if you do, it won’t cover the losses that have accrued over the last month or the near future.
 
As President Ronald Regan once said, “Government is never the solution to our problem, Government is the problem.” But that doesn’t mean to throw in the towel and give up. It just means you need to change gears and start thinking out of the box and start problem solving when it comes to reestablishing and maintaining the steady flow of sales revenue. 
 
As a veteran small business owner of the recession of 2008, I remember how the first response of many business owners was, “Let’s just wait it out”, or ”We will see an economic bounce back and will stabilize in a year”, or “Let’s apply for SBA loans and that will help infuse capital into our struggling practice”. While those were comforting ideas, it was totally out of touch with reality. It was like the string quartet playing while the Titanic was sinking. 
 
Unfortunately, as everyone knows, whenever you ask the bank for a loan, it’s denied. It’s only when you don’t need the money that the bank is ever so eager to loan it to you. And by the way, if you do receive capital for your business, you are one of the lucky ones. With that in mind, it’s pruning time to give your business a chance to survive upcoming autumn and winter seasons of business. And sadly, some of these seasons take longer than we expect. 
 
In my last blog, I suggested looking at the your cashflow statements. As with any medical practice, your largest expense is labor. I also outlined how to strategically cut employee hours including furloughs and lay-offs. 
 
Now this brings us up to date… You should now have a skeleton staff which has helped reduce the hemorrhaging of money going out the door. 
 
The next highest expense item that I would review is the lease agreement. Disabuse yourself of the notion that your lease is non-negotiable. Get on the phone and set up a time to talk to your landlord about rent relief. Don’t let your landlord bully you. You have rights and exercise those rights! (Unfortunately, most landlords look at doctors as “rich” and can afford the rent despite the drop in income. So, stay the course and push back for your tenant rights and health of your practice.) 
 
Most landlords in our present economic situation will negotiate the lease. Push back hard on a landlord that is blowing you off.  Don’t be shy! Make sure the lease agreement includes a clause that there is a current anchor tenant if you are in a larger commercial center. If the anchor tenant has closed their doors, insist that the lease is adjusted to reflect that situation.  
 
Your landlord may want to pacify you by suggesting that the rent be deferred and tacked on to the back of the lease. Don’t fall for that. You have no idea how long it will take you too recover, so don’t agree to a cost in the future that you may not be able to absorb. You need rent relief. And the landlord needs you to stay in your space more than you need to stay there.
 
Another clause that is usually included in most broiler plate lease agreement includes the condemnation/eminent domain clause. This gives tenants protection from government “takings”, or eminent domain. This is the legal argument that every business owner now has; the government mandated the shutdown and legally must provide compensation. It is compensation at its most extreme case and rent relief as its most reasonable option.
 
You must understand that your landlord has more to lose than you do. They cannot survive unless they have tenants. You have the option of moving to a location where the rent is less expensive, and the landlord is easier to work with.
 
Hard times call for hard decisions and survival leadership. I can guarantee you that other consultants out there have never owned a medical spa or wellness clinic and have no idea what it takes to survive during an economic crisis. Don’t be fooled by most consultants in your industry who have simply surfed your wake of success. In tough times like these they have nothing to offer and are useless as you make the vital moves to re-start your practice. You need to trust in experience and common sense to move forward and rebuild bigger and better.