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How to Financially Survive Covid-19

On March 25th I watched a free webinar from StoryBrand hosted by Donald Miller and Mike Michalowicz. The webinar was called "How to Manage Your Financial Plan During a Crisis." What you'll find below were my key takeaways from the webinar on how to financially survive the impacts of Covid-19.

1. Amplify Communication

You do not want to go silent during a crisis. What you do want to do is pivot your messaging. Make sure your communications to your customers do not sound tone deaf, meaning you don't want to ignore the crisis around you.

At J&J we are still sending email campaigns but now we are sending out information on how to host a virtual coffee break or how to stay connected to co-workers.

We aren't disappearing.

P.s. The same needs to be true in your personal life. You need to amplify communication with your loved ones right now. Don't go silent on them but rather, reach out more, send that text, make that phone call, ask your spouse how they are really doing.

2. Ask for Your Money

At J&J a big portion of our business is office coffee and pantry delivery service. This means we deliver products and have customers on net terms. We deliver on the 1st and theoretically they pay on the 15th. However, this doesn't always happen and more and more frequently customers have been pushing their terms out further and further.

I was worried that it would be insensitive to ask for past due payments (even though we really need those debts paid) and what I learned is that it's not insensitive but rather, necessary to ask for payment.

What we learned is that there is a Borrower to Lender line of obligation. (see chart below): The blue arrow represents the Borrow's feeling of obligation, at first the feeling of obligation to pay back is extremely high but as time goes on that feeling of obligation weakens. In contrast, the red arrow represents the Lender's feeling of obligation, at first the loan is no big deal but over the course of time, as they are going longer and longer without getting paid back, the Lender starts to feel a heightened sense of obligation to get their money.

For example if a friend borrows $100 at first they are going to feel a strong desire to pay that back, but as more and more time distances them from the original loan, they might feel less strongly about paying it back: "oh it was only $100," "she doesn't really need the money," etc.

But on the other side at first when you lend someone $100 it might not seem like a big deal, but the longer you go without receiving your payment, you are going to start to feel more anxious about getting paid back.

In the same way when J&J delivers an original order it doesn't seem like that big of a deal to "lend" a customer $2000 in product. But it starts to create a financial difficulty for us when customers don't pay on time.

The point where the arrows cross is a dangerous time because if the blue arrow dips below the red arrow, it significantly reduces the Lender's likelihood of being paid back.

So what do you do?

You reach out to the customer and ask for payment. You state that you understand everyone is being financially affected by Covid and that you are sympathetic because you too are being affected. And you ask for a payment in full.

If they reach out to you and say they can't pay in full, or if you do not hear back from them at all, then reach out and say you completely understand and offer to setup a payment plan. Ask them how much they can pay each week or each month and work a plan out that works for you both.

3. Track Any Covid Specific Expenses

This could be helpful when filing your taxes but it will also be helpful if the day comes where you plan to sell the business. You'll want to be able to show where the business would have been if Covid hadn't interfered.

4. Immediately Re-Issue Credit Cards

This won't clear any debt you have but it will stop any subscription/automatic payments you have. Cash is always king but that's even more true in a crisis. You want to make sure that you aren't spending money on anything that isn't 100% necessary and this is the quickest way to make sure you aren't paying for something you no longer need. If it is a service you need/want you will be notified by that company asking you to update your payment options.

5. Make Sure You Are Paying Yourself

As a business owner it can seem like the noble thing to do to stop paying yourself. However, the most important thing to do is to keep the business healthy and for the business to be healthy your personal finances need to be healthy. If you are going to need a business loan in the future your personal finances will be weighted. Make sure you don't make a short term fix that could have future negative ramifications.

6. Renegotiate

You need to renegotiate things like rent and services. Companies are willing to work with you. Make sure you ask for relief and rework contracts when possible.

Sidenote: If your bank is allowing it, this would be a great time to refinance your home at a low interest rate.

7. Layoff As Soon As Possible

You might think you are being kind by keeping an employee on for as long as possible. However, if you know that the company's finances aren't going to be able to sustain their employment in a month, then lay them off now. There is a lot of relief right now, allow them the opportunity to receive it when it is available.

8. Breakdown the Incremental Steps in Your Business

If you break down the incremental steps to your business you will most likely be able to find something else you can offer your customers. For instance, there are wholesale butchers who were selling exclusively to restaurants who are now offering home delivery of their meats, and there are restaurants who are now acting as butcher shops. There's a store I LOVE in Austin, called Vintage Fresh. They were exclusively a boutique shop and now they are offering E-Design services where they are helping people design rooms in their home. They have the skill set because they were already staging their store and now they're offering it to customers virtually.

In the same way, Sarah Hoag of Sarah Hoag Photography sold out of front porch photography sessions, where families could get their photos taken on their porch to document this unique time in their lives.

You can pivot! Just start thinking/brainstorming which leads me to:

9. Brainstorm with People Outside of Your Industry

It's important that as you brainstorm you bring in perspective from business owners outside of your industry. Why? Because if you only brainstorm with people inside your industry it can more likely turn into a pity party of shared hardship.

That's not what this time is for.

You should always be looking to borrow great ideas from other industries but now more than ever you need to be sourcing great ideas anywhere you can find them.

10. Use this Time to Rightsize

Maybe you were spending every penny, EXACTLY where you needed to before Covid. But there's a good chance you weren't. If the later is true for you, take this time to reevaluate and to rightsize your company.

There's an entire episode on this already, just go to for more details and/or to listen.

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