Last week, we provided a general overview of how businesses can plan for the unexpected; this week, we begin taking a closer look at each step business owners should take when creating their individual preparedness plans.

Step 1: Identify Your Risks

Source: creately.com

Each business’s identity is unique, and so are its risks. However, while we can’t foresee each and every unexpected event, we can winnow our plans down to the most likely threats. Consider your location, your industry, and the individual factors of your business situation.

Narrow your list down to your three largest assessed threats.

Now, drill down on those three threats – how might each of them impact your business?

Is it likely to:

  • Shut your office or facility down? If so, does the risk arise via physical damage to your premises or via health concerns?
  • Damage the reputation of either your business or yourself?
  • Lead to a potentially hazardous misuse of your product(s)?
  • Lead to a loss of business leadership (should the disaster cause your death or result in your leaving the firm)?
  • Create customer dissatisfaction with your product(s) or service(s)?
  • Lead to employee grievances?
  • Make your product(s) or service(s) obsolete (via technological or social changes)?
  • Interrupt supply chains for key materials and/or vendors?
  • Drive your revenue down?
  • Create a drastic increase in demand for your product(s) or service(s), which you will not be able to meet?
  • Increase your operating expenses to address the challenges you face?
  • Cause your technology to fail?
  • Cause an extended power outage?


Once you’ve identified the likeliest avenues of risk to your business, you can develop a response strategy, listing the best steps you can take in advance to militate against those risks.

We’ve created a worksheet you can use for this purpose – more on this next week.

Whatever your individual business risks, we recommend the following as general steps to take to prepare your business for the unexpected:

  • Make sure your technology and data storage resources are secured and that backup systems are in place.<
  • Set your team up for remote work to the extent possible.
  • Review your Business Interruption insurance to ensure it provides sufficient coverage. If you don’t have such coverage, get it.
  • Ensure you have a business continuity plan in place in case of an unexpected change in company leadership.
  • Keep your business premises in good repair; this will at least mitigate physical damages. And make sure your insurance coverage is up to date!
  • Ensure your contacts are kept current.
  • Make certain you have all insurance policies kept safely and accessible to you electronically as well as physically.


The good news: 14 months into the COVID-19 pandemic, you and your business are almost certainly much better prepared for the unexpected than you were at the start of 2020. Think about all the ways you have had to adapt in order to cope with the barrage of mandates, directives, and regulations. And that’s assuming you’ve had no other significant disruptions to your business operations, and that neither you nor your team members have had to deal with contracting the virus itself, both of which have further challenged businesses during this global crisis.

What specific challenges has your business faced as a result of the pandemic? What strategies did you use to meet those challenges?

And can you see ways in which those strategies can be employed to meet challenges posed by other unexpected events?

Please click here to email me directly – I’d love to hear how you’ve dealt with your pandemic obstacles!

Until next Wednesday –

Peace,

Eric

To Our Valued Clients and Friends:

Are chief executives prescient? In a PriceWaterhouseCoopers’ annual survey of executives, 73% of them anticipated facing a crisis for their businesses within the next two to three years. As we navigate our second year of COVID-19, it makes us wonder whether any of them could have anticipated a global pandemic such as we have been experiencing, a crisis of such epic proportions. However, they were certainly right to anticipate a crisis of some sort.

We can’t ever know what the future holds, but one thing we can know – something unexpected will happen. We don’t know when, we don’t know what, and we don’t know what the impact will be or how long it will last. But it’s a good idea to anticipate and prepare for contingencies and emergencies to the extent we can – and it might surprise us to find out just how much planning can mitigate the effects of an unexpected crisis.

This email is Part I of a series on how businesses can plan for unexpected events; this week, we will offer a general overview of areas to consider when planning. As we move through the series, we will go into greater detail on each specific area of planning for the unexpected.

We’re all suffering through COVID-19; according to Score’s September 2020 report, the pandemic has affected just about every U.S. business, but closely-held businesses have been especially hard hit.

None of us can plan for each and every possibility; it’s counterproductive and too expensive to try. But it is possible to develop a mindset of overall readiness, to institute flexible disaster-response policies and procedures which will help keep your business running in any crisis. You should continuously re-evaluate these policies and practices to improve their effectiveness, and you should maintain and update a business continuity agreement in order to ensure your business stays afloat in a storm.

Key elements of planning your businesses’ preparedness:

    • First and foremost, know your risks. Identify the most likely disruptions to your business, and focus on preparing for those.
    • Make sure your technology and data storage resources are secured, backup systems in place.
    • Set your team up for remote work.
    • Review your Business Interruption insurance to ensure it provides sufficient coverage. If you don’t have such coverage, get it.
    • Have a written disaster-preparedness plan; make sure it is disseminated and discussed with your team, so everyone knows what’s expected of them. Make sure you review this plan once or twice annually and revisit the discussion every time you make an update.
    • Test your plan periodically, to see whether it works in practice for your business, yourself, and your team.
    • Make sure you have a business succession plan in place, as well as a business continuity agreement.


    One last note – some emergencies stem from the unexpected result of a project or change initiative. It’s a good idea to plan out potential scenarios before putting the final touch on your project or change, preferably with input from those who will be most affected.

    What preparations have you instituted to prepare your business for the unexpected?

    Please click here to email me directly – I’d love to hear your strategies!

    Until next Wednesday –

    Peace,

    Eric

To Our Valued Clients and Friends:

On August 26, 2005, the Friday before Katrina struck, I was on the 21st floor of an office tower across from the Superdome, wrapping up a project for an important client. As I looked out the window on that dreary, rainy day, I began to hear reports of oil and gas rigs being evacuated due to the oncoming storm.

When the dust of my own evacuation settled, I found myself, a 40+-year-old man living with my wife, Jennifer, and our five-year-old daughter, Meghan, in a spare bedroom of my parents’ Baton Rouge home. I didn’t know whether we had a home to return to. I didn’t know whether I’d have an office to return to – at the time, our firm was on Poydras Street across from the Superdome, as noted, which had suffered significant damage.

I didn’t know whether I had a functioning business left. I did know I had a substantial number of insurance claims to file. My entire future looked and felt very uncertain; this created enormous anxiety for me, and I could do little, at that point, to relieve it. Any action I could take was welcome.

A buddy of mine, also sheltering near Baton Rouge, called me. “Look. I’m going in.” He and his wife had tragically lost their 5-year-old daughter the previous Thanksgiving, and in their rush to safety, had left many of her baby pictures in New Orleans.

As the father of a little girl myself, my heart went out to him, and all of me went with him on his journey.

Well, it was certainly an adventure, I’m here to tell you. We drove down to New Orleans, my friend got us a pass from the State Police so that we could get into the city, and we boarded a flatboat near the Southern Yacht Club on Lake Pontchartrain to navigate down Canal Boulevard.  

The sight still resonates in my mind – I can see it anytime I close my eyes. As we motored down Canal Boulevard, we had to be very careful, because the water was even with the power lines, which were 14 or 15 feet above street level.

But after a painstaking, cautious navigation down what was then a waterway in Lakeview, we finally reached my buddy’s house; the front door was partly opened but jammed in its frame. Together we kicked it down. The dining room table was upside down, chairs were upended all over the place – and that was the least of it. The house had flooded badly, we could see to where the water had risen by the lines of mud on the walls, about 4 feet above floor level. It remains one of the most devastating sights I have ever witnessed in my life.

But none of that mattered – we were on one single mission – get those baby pictures.

And we got them! 

Helping my dear friend in his and his wife’s need was one of the proudest days of my life. 

Katrina was life-changing, and perspective-changing as well, for many of us in the Gulf region. 

What events have shaped your life in a similar way? 

Please click here to email me directly – I’d love to hear from you.

Until next Wednesday – 

Peace,

Eric

To Our Valued Clients and Friends:

Welcome to Part II of our updates on Paycheck Protection Program (PPP) loan forgiveness.

Last week, we discussed changes made to which expenses were designated “eligible covered expenses,” both for businesses generally and for self-employed business proprietors who file Schedule C with their individual income tax returns.

This week, we will discuss the PPP Loan Forgiveness process.

The Process

You have until ten months following the expiration of your 8-week or 24-week coverage period beginning with the date of distribution of your PPP loan proceeds to apply for loan forgiveness from your bank, who will forward your application to the SBA for approval. We strongly recommend that you do not wait until the last minute to apply for forgiveness. Currently, your lender may take up to 60 days to review your application, after which they will either request additional information or begin processing the application. Then the SBA has 90 days to review your application, and either approve or deny it, or request further information from you.

The SBA has communicated that all PPP loans of over $2 million will be closely analyzed, if not subject to a full audit.

In addition, self-employed individuals who file Schedule C with their individual income tax returns – newly eligible to base PPP loan amounts on gross income – are not deemed to have an automatic “Safe Harbor” if the gross income on which the loan calculations are based is over $150,000.

For other PPP borrowers with loans of $150,000 or less, no supporting documentation is required to be submitted in order to apply for loan forgiveness. However, the SBA may request supporting documentation, which all PPP borrowers are required to maintain.

Many lenders, if not all, have specific portals for uploading documents for PPP Loan Forgiveness; some have an online application form of their own, which borrowers must complete.

Some of these lenders’ portals, however, may not yet be accepting PPP Loan Forgiveness applications, as they have been extremely busy processing applications for PPP Round 2 Loans; we suggest you maintain regular contact with your banker if this is true in your case, in order to be sure you get your PPP Loan Forgiveness application submitted timely.

We suggest that, if your PPP loan is greater than $150,000, you consult your CPA for assistance in completing the complex calculations required for payroll costs, ensuring that:

  • At least 60% of PPP loan proceeds were spent on eligible covered payroll-related expenses
  • The less-than-25% wage reduction requirement has been met
  • Full-time equivalency levels have been maintained


Remember that, if all these levels have not been met/maintained, then at least part of your loan might not be forgiven. Your CPA can also help clarify what supporting documentation is required, and prepare your PPP Loan Forgiveness application for you.

When you are confident in your completed application and have amassed all your supporting documentation, submit your prepared PPP Loan Forgiveness application to your lender, either via electronic means or as otherwise directed by your lender. As of April 1, 2021, the SBA had already forgiven $209.1 billion in PPP loans.

Note that the SBA can always require more information from you or audit your loan – be prepared, and if you are unsure about any aspect of the PPP Loan Forgiveness Application form, the calculations, or the process, consult your CPA.

Forgiveness application forms:

Form 3508

Initially, the U.S. Small Business Administration (SBA) issued a one-size-fits-all application for the forgiveness of PPP loans – Form 3508 (the form has since been amended, most recently as of January 19, 2021). This form, still applicable for those ineligible to use either of the simplified forms below, as amended, requires substantial calculations on the part of the applicant, as well as thorough supporting documentation.

Form 3508EZ

Under pressure from Congress and industry to reduce the burden of the forgiveness process for borrowers of smaller amounts and smaller businesses, in June of 2020  the SBA added Form 3508EZ (also amended as of January 19, 2021). This form could be used by certain PPP borrowers who certified that they fulfilled any one of three criteria concerning employees’ retention and hours paid (see our blog post here for more detail).

As amended on January 19, 2021, Form 3508EZ now has two acceptable criteria for eligibility, rather than three, and requires “show your work” calculations on page 1, as well as supporting documentation.

Form 3508S 

As of January 19, 2021, the PPP loan ceiling to use Form 3508S has been increased to $150,000, rather than $50,000, and no supporting documentation is required for submission to the SBA (lenders may have their own requirements).

There will almost certainly be more updates on the PPP to come – stay tuned!

If you have questions regarding applying for forgiveness of your PPP loan, please click here to email us directly – we are here to help.

Until next Wednesday –

Peace,

Eric

 

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