Right now, small businesses all over the world have been forced to adapt on the fly to the new reality of the novel coronavirus (COVID-19) pandemic. For many, it has meant hurriedly getting employees set up to work from home, while for others (such as businesses reliant on shuttered retail locations) it has meant putting their whole enterprise in a holding pattern. Needless to say, the situation has been unnerving and stressful for employers and employees alike.
Still, there are a variety of critical business functions that can still proceed, regardless of the physical restrictions in place. But without the ability to operate at full capacity, that means there’s only so much work to go around to keep employees busy with productive tasks. That’s creating some difficult decisions for small business owners surrounding what to do with a sudden surplus of employees during the crisis.
Fortunately, there are some ways (short of outright furloughs or layoffs) that business owners can act to protect their bottom lines while simultaneously helping their valuable employees get through the crisis with them. All it takes is some flexibility, a little creative thinking, and a willingness by the business owner to lend a helping hand when they have the means to do so. To help, here are three great ways that small businesses can adapt their operations to avoid or reduce the need for furloughs and layoffs.
Adopt a Shared-Work Program
Depending on where the business is located, one of the best options to help reduce costs without letting any employees go is to adopt a shared-work program. It’s a strategy that helped an untold number of businesses ride out the financial crisis in 2008, and it could work just as well today. Under a shared-work plan, a business creates a schedule to allow employees to split the available work, with each taking a reduction in hours and pay. In states that allow it, the business can then register the plan with the local unemployment office and employees will then receive partial unemployment benefits according to the percentage of work hours they’ve lost. In some cases, this allows employees to earn the same take-home wages, even while the business operates at a reduced capacity. It’s a win for all involved – the business, the employee, and the state’s unemployment fund.
Take Advantage of the Paycheck Protection Program
Right now, the unprecedented nature of the current crisis has forced the federal government to respond by offering small businesses a lifeline consisting of low-to-no-cost loan programs custom-tailored for the situation. For small businesses that qualify, one of the best options to consider is the Paycheck Protection Loan (PPP) program. As its name suggests, it’s a loan arrangement that provides low-interest loans of up to $10 million for businesses to cover their payroll costs, rent, and utilities during the disruption.
The best part of the program is the fact that the loans are completely forgiven if they’re used for their intended purpose – to keep employees on the payroll – so there’s almost no downside for the business taking the loan. The one caveat is that the loan proceeds may not be used to cover payroll taxes, so it won’t relieve the small business of all its employee overhead costs, but it should get the vast majority of businesses through the crisis without laying anyone off.
Provide Advances and Resources for Workers
For businesses that are either unwilling or unable to take advantage of the PPP loan program and still need a solution to take care of employees in the interim, a combination of tactics may work best. First, wherever possible, employers should create a payroll mechanism to allow for salary and hourly pay advances to help employees meet their ongoing costs in the short-term. It’s a share-the-pain approach that can help workers to deal with their immediate financial needs while they and the business adapt to the situation.
Next, for employees who have had their hours cut but who aren’t eligible for any other relief via unemployment or other programs, the business should create a resource list to provide them with other ways to earn money online while they’re forced to stay home. By marshaling such resources, the business can be an ally to employees to help them to weather the crisis without taking undue financial risk itself. While not an ideal situation, it would provide a means for both employers and employees to stay afloat until the situation improves.
Emerging from the Crisis in Good Shape
By making the right moves now, there’s a good chance that affected small businesses can find a way to get through this crisis without taking on crushing debt or being forced to part with any employees. After all, small business owners need to recognize that it won’t help their business to survive if it must face the prospect of reopening without its most valuable assets – experienced employees. At the same time, most employees will recognize the position the business is in and will be grateful that they’re not being made to suffer the effects of the crisis alone. In the end, everyone involved can get through the situation together, provided the right plans are in place. Then, when the time comes, the business can come roaring back to life and make up for the time lost to this unfortunate situation without skipping a beat.
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