Many businesses are experiencing financial hardships as the COVID-19 pandemic forces them to shut down or sharply curtail operations.
While banks are trying to help their clients though the downturn, business owners need to be prepared before visiting the bank to seek assistance, according to Jacksonville-based Heritage Capital Group.
“You want to have a plan,” said Mac Holley, one of six principals of the investment banking firm who held a webinar April 8 on working through the pandemic.
“You don’t want to just walk into your banker and say ‘I’ve got a problem, what can you do to help me?’ ” Holley said.
A live poll of more than 100 participants in the webinar found about 80% have been somewhat or substantially affected negatively by the pandemic.
“Most companies have been negatively affected,” said Heritage President Don Wiggins. “Some sectors have been hard hit more than others.”
Holley said businesses that do their homework before visiting the bank, such as projections of cash flow over the next 90 days, will get a quicker response.
“Be confident, but not cocky. Be ahead of the curve,” he said.
While being confident, business owners also have to pin the lenders down to get a rapid response, Holley said.
“Time is of the essence,” he said. “Put the ball in their court and hold them accountable.”
If banks are not responding quickly enough, Bill Nicholson advised businesses to seek alternatives. He said there are banks new to the Jacksonville market that may be more receptive.
“They would love to get a relationship with a good company that maybe is having a bump in the road with their existing bank,” he said.
Even if the existing bank is helpful, it doesn’t hurt to build an additional relationship with another bank, Nicholson said.
“You need two banks in your stable,” he said.
Businesses that offer essential services and are not seeing a slowdown may still run into problems if their vendors are having difficulties, said Doug Kravet. Companies need to be prepared to seek alternative suppliers.
“Having a robust new vendor screening process is important and being able to go through that quickly and efficiently is critical at this point,” Kravet said.
Businesses not experiencing slowdowns or maybe even seeing a spike in demand have to prepare for pandemic-related issues, such as a critical employee contracting the virus and having to stay away for two weeks or more, Bill Sorenson said.
Sorenson said businesses should provide cross-training or make other contingency plans for employees who can’t work.
“It’s important that you have backup,” he said.
Sorenson also said companies can’t lose focus on quality just because of the unusual pandemic situation.
“You can’t afford poor quality going out the door,” he said.
As an investment banking firm, Heritage works with a lot of companies on mergers and acquisitions. Even as the economy is disrupted, businesses remain interested in buying and selling, Wiggins said.
“Buyers still show every evidence they want to get deals done,” he said.
“It’s a great time to be a buyer as long as you have the resources and you have a well-organized strategy,” said Dan Edelman.
The same principles that apply in normal times apply to seeking acquisitions now, such as lining up financing and assembling a team to handle the merger integration, Edelman said.
“Acquisitions even in a good economic time are difficult to execute,” he said.
Besides targeting businesses, some companies may have an opportunity to acquire more talent for their teams during the pandemic, Edelman said.
“Build your bench strength now,” he said. “There are a lot of outstanding individuals who have lost their job for no reason of their own.”
Wiggins said business owners who may be considering selling shouldn’t rush into any deals because of the pandemic.
“Be patient and be ready to move at the right time,” he said.
“Don’t panic. This is a problem that will pass.”
