As most of the nation shutters businesses and families stay at home amid the COVID-19 pandemic, those of us in the towing and recovery industry are deemed essential businesses. Small business owners are left trying to provide service for their customers and generate necessary revenue but safeguard their employees as much as possible. This health crisis has presented challenges and mass disruption on a scale that few if any, small businesses were truly prepared to face.
Recently, several of you responded to a poll sharing how your company is managing during this crisis. Thank you for your participation! The initial feedback was bleaker than anticipated for being just two to three weeks into the heart of this crisis in the U.S. In fact, just under 9% of respondents stated that business was up, with or without emergency plans. Approximately 49% of companies are steady or showing a slight, manageable decline, and nearly 43% were showing a significant decrease and concern for their proprietors.
Now with a cycle of loan payments due and payroll, these numbers are likely to continue to show an increased burden on the families working hard to provide service for their communities, sustain their business and livelihoods of their employees. Should any of the respondents who shared that they had proper plans in place be willing to share more, I would appreciate the opportunity to speak with them. In my experience with strategic planning and crisis management, I did not foresee many companies in our sector having thorough emergency management plans in place, so that was encouraging.
With most in our industry seeing some decline or concerns, the time is now to reevaluate your business plans. Take time to do a thorough review of your operating budgets, contingency plans to capture as much business as possible, employee safety practices, and how to sustain your company for the long haul. Three factors are universal among successful enterprises – honesty, transparency, and communication. Honest and transparent communication with your employees on expectations, concerns, and the ever-changing nature of recommended procedures and protocols show strong leadership and respect that you are in this together. No one wants to see businesses struggle, especially those who rely on them the most. It is also crucial to communicate with your customers. Reach out and let them know if you are operating as usual, have special hours, are offering services of convenience to accommodate social distancing, or have other safeguards in place for your team and their best interests.
Two key factors presented themselves as important differentiators within the towing industry. Geography has a direct impact on towing & recovery companies. Not only does the location on major truck traffic corridors factor in, but some regions are also more reliant on automobile transportation to get groceries, medical supplies, and necessities. There are also apparent differences in the operations of companies who perform auto repairs, do significant club towing, or private light-duty towing and others who focus on the heavy-duty market. While there is a decline in truck traffic and projections are charting for a bleak Q2 of 2020, trucks are essential to moving freight, and companies with contracts to transport essential goods will continue to operate. Meanwhile, in some areas, automobile travel is significantly decreased with shelter-in-place orders and quarantines. Many families are also delaying vehicle maintenance and saving fuel due to uncertainty of pay, furloughs, or unemployment.
Some of the common issues that small businesses may encounter during these difficult times include:
• Access to Capital – Unforeseen incidents like this pandemic are a strain on any company’s financial capacity to make payroll, maintain supply inventories, and necessary operating expenses. Small businesses are especially at risk, but there are options and resources available.
• Workforce Capacity – This crisis has as much impact on your workers as your customer base. Providing reasonable protection and safety accommodations at work is essential. Their overall health and well-being, including mental health, is vital to being able to continue to serve your customers.
• Supply Chain Shortages – Disruptions to the supply chains of necessary goods for business operations can also be a critical issue. For example, a prominent filter manufacturer recently announced production issues that will have a trickle-down impact on repair facilities and trucking fleets across the nation. For businesses providing repair service, diversifying distributors sooner than later may prove helpful.
• Facility Decontamination – In the case of potential exposure to COVID-19, thorough decontamination of your facility with professional cleaning materials may be necessary. Preparations for how you would handle a disruption to business now may save you unnecessary downtime later.
• Decreased Demand – Reduced and restricted travel may have negative implications for your business. Companies that focus on automotive repairs and private, light-duty towing may be more prone to feeling the effects of the economic downturn sooner than those working with essential businesses or heavy-duty fleet customers.
• Insurance Coverage Issues – Many companies have business interruption insurance, so now is the time to review your policy with your agent to learn precisely how you are covered or not covered.
• Marketing Communication – Communication with your customers, especially during times of crisis, is crucial. Sharing the status of your operations plus what protective measures you are taking to keep them and your workplace safe would increase confidence in using your services. Convenience-added features and special promotions are options that may help bolster your business.
• Continued Reevaluation – Challenging times require continual reassessment of business plans and critical needs as the climate often changes. Developing an emergency response plan, if you do not already have one, provides a strong foundation to assess when emergencies arise. Adaptability is crucial!
The Small Business Administration has financial resources available that may be useful during these unprecedented times of crisis. Cash Flow Assistance through the Economic Injury Disaster Loan (EIDL) may be available. Businesses with less than 500 employees are generally eligible and there is an advance up to $10,000 within three days that will not have to be repaid. Working Capital Loans up to $2 Million are available to pay fixed debts, payroll, accounts payable, etc. with interest rates of 3.75% and terms up to 30 years. Assistance to keep your workers employed also exists via the Paycheck Protection Program, with loans up to 250% of monthly payroll ($10 Million cap). These funds can be deferred for six (6) months and offer a maximum interest rate of 4% with up to a 10-year term. Loans may be forgiven based on the level of employee retention and are available through your local SBA 7(a) certified lender. The SBA website offers a wealth of information online at https://covid19relief.sba.gov
I hope that this article was useful and welcome suggestions for future installments or topics of interest. Stay safe!
April 21, 2020