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How to Run a Successful Business in Uncertain Times

Business UncertaintyThis year has introduced businesses small and large to unprecedented levels of uncertainty. Even being intimately familiar with the adage in business, “the only constant is change,” very few companies were prepared for the changes that 2020 has brought us so far. These changes are still taking place and will likely continue for some time to come.

So, how does a business stay afloat, even grow when so much uncertainty abounds? In this two-part series, we hope to be able to answer that question and give you some tangible recommendations as to how you can make your business more “uncertainty-proof.”

Strategic adaptability is a term that is bandied about a lot but is much more critical now than ever before. Simply put, strategic adaptability refers to having the infrastructure in place for your business that allows it to evolve when necessary. You’re probably already doing this on some level, in looking at customer preference changes or for sudden changes in the cost of goods and services.

RELATED ARTICLE: Protecting Your Business from Disaster

The original idea behind strategic adaptability is to make your business as adaptable as possible. While it may seem impossible to plan strategically for an infinite number of outcomes, there are some basic things that almost any business can do to increase its adaptability and afford itself some protection from so much uncertainty.

  1. Digitize, Digitize, Digitize

If you have been putting off your business’s entry into the digital era, now is absolutely the time to stop procrastinating. The more of your infrastructure that is digitized, the more easily tasks can be handed off, done remotely, altered, and more efficiently coordinated. Recent research indicates that this sort of adaptability for businesses is precisely the ingredient needed to avoid disruption in providing goods and services.

Gilmore Jasion Mahler itself is actually a good example of a business that has successfully transitioned to a mainly digital infrastructure. Maybe the changes our firm made will help your business too.

When the firm moved its Maumee headquarters to a new building last fall, leadership took the opportunity to embrace some additional digital platforms, including Microsoft Teams, which allows virtual meetings and all phone calls to happen through the computer desktop, no handset necessary. The firm had also transitioned earlier to some cloud-based solutions in a number of other areas of client service prior to the pandemic. For example, secure document storage.

“I feel we’re very lucky,” says GJM managing partner Kevin Gilmore. “When the COVID-19 crisis hit, we had made some smart decisions and had the digital infrastructure we needed in place. Our team was able to seamlessly transition to remote work without missing a beat. Had we not made those infrastructure changes, I imagine we would have had much more difficulty transitioning to a remote workforce.”

The manufacturing sector is certainly proof of the power of adaptability during the pandemic. Many car companies and other manufacturers quickly retooled to start producing ventilator components, face masks, face shields and other PPE to meet the needs of overwhelmed hospitals and other healthcare providers.

  1. Build Adaptability into Day-to-Day Management and Labor Practices

What does it look like, on the ground, for a business to build adaptability in to the day-to-day?  

For one, it requires management to take an active role in recognizing the uncertainty and establishing a resilient team to work with; it may also be the time to evaluate which of the old ways aren’t working for a business in the current climate. Focusing on practical solutions and priorities is also key to building this adaptability into daily operations. It’s useful to start with what outcomes you desire and work back from there, adapting the infrastructure as needed to achieve those outcomes. Encouraging collaboration and adaptability in your workforce is another quality shared by companies that are faring well in the current climate. While this may involve some training, these skills are more important now than ever.

Part two of this series will address some of the ways that organizations can help their workforces build the vital skill of adaptability.

Your business can access the latest information on the COVID-19 pandemic and its impact on industry in the GJM COVID-19 Resource Center.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

How Does a Paycheck Protection Program (PPP) Loan Affect Business Valuation?

How does a PPP loan affect business valuationThe COVID-19 pandemic has brought countless financial concerns for businesses across the country as many struggle to thrive, or even survive. In this GJM Q&A blog we tackle a question any business will need to answer if they've received a Paycheck Protection Program (PPP) loan and a valuation is in the cards.

Question: How does a PPP loan affect business valuation?

Answer from Jeff Denning, CPA, ABV, CFF:  

The COVID-19 pandemic has had an enormous impact on the business sector. The U.S. stock markets were initially affected in late February. Accordingly, appraisers of closely-held businesses have generally considered additional investment risks, lower projected profits, and lower growth rates in valuation engagements using ‘as of’ dates from late February to the present date. 

If your company received a loan through the Small Business Administration’s Paycheck Protection Program (PPP), an appraiser will need to take that into account when working to arrive at a value for your business. A business appraiser should separately consider any PPP loan payable balance, offset by unused cash in the PPP account, if any, as of the valuation date and the probability of a forgiveness amount. The consideration of the use of the loan proceeds should be in management’s profit and cash flow projections and then part of the appraiser’s overall probability and scenario analysis under an income approach to valuation.    

Jeff Denning is a partner with Gilmore Jasion Mahler, LTD and has 30 years of accounting experience, with a focus on providing services as an accredited business appraiser, forensic accountant, litigation consultant, and expert witness. For the past 20 years, his career has been focused on performing business valuations, accounting investigations, and damage calculations; preparing hundreds of expert reports and appraisal reports; and providing accounting and financial expert testimony.   

You’ll find more resources related to the COVID-19 pandemic’s impact on your business at GJM’s COVID-19 Resource Center.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

New Stimulus Proposal, Existing Loan Programs & A Business Checklist

COVID-19 Stimulus Proposal, Loan Programs, Business ChecklistThe US Senate has proposed a new $1 trillion stimulus package to bring more help to struggling Americans and businesses during the COVID-19 pandemic. The Health, Economic Assistance, Liability Protection and Schools (HEALS) Act announced July 27, 2020 proposes through a series of bills to bring more help to individuals, businesses and schools, including:

  • A second round of $1,200 stimulus checks for individuals
  • Liability protection for businesses from COVID-19 related lawsuits
  • Capping federal unemployment benefits at 70% of wages
  • Extension of the Paycheck Protection Program allowing certain businesses to get a second PPP loan
  • Over $100 billion for schools
  • $25 billion for COVID testing

The package is in response to a stimulus package proposed by the US House of Representatives in May (The HEROES Act). Negotiations now begin to reach a final compromise before the Senate summer recess begins August 7.  

Help for Businesses

As of now, there are several options for businesses to get help, including the recently launched Main Street Lending Program, now available and accepting applications. Which businesses and organizations can apply for this program? And what’s the status of the other existing loan programs? What else should you be doing to protect your business in these unprecedented times?

GJM’s Bob Bobek, CPA offers this easy reference status report on loan programs out there and an important checklist for businesses.

COVID-19 Business Loan Programs Status Report

Paycheck Protection Program:  

The Paycheck Protection Program (PPP) was established through the CARES Act and is run through the Small Business Administration (SBA). PPP loans are forgivable for those borrowers who prove they meet requirements for forgiveness. The loan program is intended to help businesses keep workers on the job during the pandemic. Loans must be $10,000,000 or less. Those businesses with loans under $2 million will be deemed to have met the economic uncertainty requirements for the loan. Some other details on the PPP:

  • Money must fund payroll and specific nonpayroll costs (like rent, utilities)
  • Loans received before June 5: maximum 2-year maturity
  • Loans received after June 5: maximum 5-year maturity
  • Loans are issued through approved lenders
  • Interest rate: 1%
  • File forgiveness application with your bank
  • Application deadline extended to August 8, 2020

Paycheck Protection Program status: Second round of funding is now available, and applications are being accepted. As of July 24, 2020 the SBA reports there are over $130 billion dollars left in funding for the PPP. You can access the PPP loan application here.

Main Street Lending Program  

The Main Street Lending Program was established as part of the CARES Act, offering $75 billion to those businesses and organizations that meet requirements. Designed for: small/medium-sized businesses in good shape prior to the pandemic that didn’t qualify for the PPP or need more help in addition to their PPP loans. Other information:

  • Standard loan, not forgivable
  • Accessible to nonprofits
  • Loans issued through approved lenders
  • No more than 15-thousand employees or 2019 annual revenues no more than $5 billion
  • Minimum loan $250,000
  • Principal payments defer 2 years
  • Interest payments defer 1 year
  • Maturity of 5 years. 15% in years 3 and 4. Year 5: 70% balloon payment

Main Street Lending Program status: Now open for applications through September 30, 2020. Businesses must work with an eligible lender.

Economic Injury Disaster Loans (EIDL)  

Economic Injury Disaster Loans (EIDL) are designed to help businesses and nonprofits in response to a disaster like a hurricane or flood. Administered by the SBA, they provide liquidity in a time of need and have been made available as a result of the COVID-19 pandemic.    

Some details:

  • Capped at $150,000 per company
  • Very low interest rate: 3.75% for businesses, 2.75% for nonprofits
  • Not forgivable
  • You get 30 years to pay back the loan
  • Can defer first payment for a year
  • Can get both PPP and EIDL, just don’t use the money to pay the same expenses funded by your PPP loan

EIDL status: accepting applications. You can access the EIDL application here.

Your Checklist:

So, you have a high-level view of the loan programs out there to help businesses respond to COVID-19. What now? GJM Partner Bob Bobek has counseled many of his clients and other businesses through COVID response to secure a loan that will work for their business and help them to get through this difficult time with more liquidity. If your business has decided to pass on applying for a loan, he cautions that could be a big mistake.  

“These loan programs have been designed with one goal in mind: to infuse cash into American businesses,” he says. “The government has made available billions and billions of dollars for these programs. It won’t be reallocated. When it’s gone, it’s gone.”

Here’s Bob’s checklist for businesses not sure how to proceed:

  1. Talk to your banker. He or she can assist you in deciding which loan program is the right fit for your business. Bob says most banks are willing to defer loan payments to help you keep more liquidity.
  2. Talk to your landlord. Most landlords are open to deferring payments or restructuring your lease.
  3. Talk to your insurance agent. If your sales volume is down or equipment is idle you may be eligible for a reduction in your insurance cost.
  4. Look at the Paycheck Protection Program. If your business decided not to pursue a PPP loan, Bob says you need to look at this again.
  5. Defer FICA taxes. The CARES Act allows businesses to delay payment of the FICA Match portion of your payroll taxes through December 31, 2020, with half due by December 31, 2021 and the rest due December 31, 2022.
  6. Review other government loan programs such as the EIDL and Main Street Lending Program. While they are loans, they have favorable payment terms. They will help give you that extra liquidity in case you get hit hard by the downturn and find your business in a position where its more difficult to secure a loan.
  7. Talk to your accountant. In addition to the loan programs outlined here, your business could qualify for tax credits as part of the CARES Act.

Bobek says be sure you look into all options that can help you get through this worldwide public health emergency, including any new opportunities that may result from the HEALS Act. You want to be sure that the business you worked so hard to build can survive and even thrive through the pandemic and into the future.

Bob Bobek CPA Gilmore Jasion Mahler Bob Bobek, CPA has presented frequently on the Paycheck Protection Program and other loan programs designed to help businesses during the pandemic. He’s helped many business owners determine which loan program is right for their business and assisted with loan and forgiveness applications.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

How to Earn a Six Sigma Certification

Lean Six Sigma Certification GJMYou have learned about Six Sigma methodology and the ways in which it can benefit your business by reducing defects and increasing efficiency, morale, and productivity. Now you want to learn how to earn Six Sigma certification and apply its principles to your organization’s processes to positively influence the future of your company.

The final part in our Lean Six Sigma series will explain certification levels and show how certification can benefit your business and your employees.

The skill levels of Six Sigma demonstrate various degrees of proficiency and experience in improving business processes and increasing efficiency. There are five certification levels, which accreditation bodies such as the American Society for Quality recognize.

These accredited programs offer training classes on Six Sigma. Skill levels include:

  • White Belt. This basic training involves the Six Sigma basic concepts and supporting change management. White belts develop teams that solve problems in company projects.
  • Yellow Belt. A yellow belt has a basic comprehension of Six Sigma and supports the efforts of green belts and black belts.
  • Green Belt. Six Sigma green belts collect data and work together with black belts. Their responsibilities generally extend beyond the Six Sigma project.
  • Black Belt. Six Sigma black belts are fully engaged in the project and oversee it full time. They are project managers who train and call the shots for green, yellow, and white belts.
  • Master Black Belt. This is the highest level of Six Sigma training. The master black belts act as coaches, consultants, and experts that lower level Six Sigma professionals turn to when problems arise. They develop key metrics, strategize, and solve difficult issues.

Gilmore Jasion Mahler’s six green belts have shared Six Sigma goals with our entire firm and helped all staff to embrace these new ways of thinking and new processes. Many of the internal process changes in recent years are directly attributable to Lean Six Sigma.

GJM staff certified in Six Sigma have also been able to share best practices with clients.

“This is knowledge that can help any business to streamline, be more efficient and save time & money,” says GJM Partner Mike Brough who is a member of the firm’s Manufacturing Specialist Team. “I’ve had the opportunity to share some ideas with manufacturing clients that they can take back to their staff and implement.”

Having Six Sigma certification has benefits from a professional development standpoint as well. For example, certification noted on a resume could help you land a rewarding and lucrative job. Employers know that certification for higher level belts involves years of work and studies. As a business owner, Six Sigma certification within your organization increases productivity, reduces defects, and brings in more revenue. To get certified start by finding an accredited training program in your area or you can pursue online and virtual training options. Enroll yourself and interested employees in the program, then be prepared to study. It’s a rigorous and challenging program. The exams are serious accomplishments. The yellow belt test takes around two hours, the green belt exam takes roughly three hours, and for the black belt, four hours of exam time is normal. Lastly, complete your written exam and projects to earn your belt. Then take your knowledge back to your team and you’re on your way.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities

Why Highway Contractors Expect a Delayed Slowdown from COVID-19 and How the Government Could Help

COVID-19 Delayed Impact for ContractorsThe COVID-19 pandemic has changed modern industry and commerce in many surprising ways. More people are working from home than ever before, and public officials are weighing their options when it comes to pursuing projects and maintaining financial flexibility in uncertain times.

The pandemic’s financial toll spans just about every industry. But there’s an exception, at least for now. You’ve probably noticed building and road projects underway this summer as contactors continue their work on projects planned prior to COVID-19. While there may be plenty of work now, heavy highway contractors know that next year will likely be another story. These service providers are typically responsible for building and restoring the nation’s highways, but it’s unclear whether those projects will be funded in 2021.

Three Factors Influencing the Anticipated Heavy Highway Contracting Slowdown

The anticipated lack of work facing members of the heavy highway contracting sector is a multifaceted issue, but it ultimately boils down to spending.

  1. Tax revenue from motor fuel sales is down for every county in Ohio as people are driving much less than usual overall. This means less funding available for the state’s transportation budget, the first roadblock facing the heavy highway contracting industry.
  2. Local municipalities are hesitant to give new road projects the green light due to the economic uncertainty the COVID-19 virus has caused. Many cities and towns have delayed ongoing heavy highway construction projects or postponed them indefinitely.
  3. Yet another hurdle facing the heavy highway construction industry is the intense competition for the limited number of contracts awarded at the state and county level.

These are just three of the reasons why the heavy highway contracting industry faces such potential dire straits in the months ahead.  

Government Assistance

Heavy highway and other contractors have received some much-needed assistance from the Small Business Administration (SBA) Paycheck Protection Program (PPP), designed to infuse companies with liquidity to help weather the pandemic. In fact, according to SBA figures released in late June, construction is one of the top three industries to receive PPP loans.

 

SBA PPP Loans:

  1. Healthcare/Social assistance
  2. Professional, scientific & technical services
  3. Construction

Source: SBA PPP loan report as of June 27, 2020

 

According to SBA figures, construction companies had received about 12% of PPP loans as of June 27, not far behind the top two categories: healthcare and professional services.

GJM partner Bob Bobek leads the firm’s Construction & Real Estate Specialist Team. He’s counseled many of the firm’s construction clients through the process of applying for a PPP loan and requesting loan forgiveness.

“The Paycheck Protection Program (PPP) pumped some much-needed cash into many construction businesses,” he says. “In fact, almost all of our construction clients participated in the PPP. More support from the government moving forward will definitely help the industry to recover from the pandemic-induced recession.”

Bobek has presented a number of webinars in recent weeks on the PPP Program. You can access recordings of the webinars in the GJM COVID-19 Resource Center. Bob encourages any construction business, or any other business for that matter, to look into the PPP if they haven’t already. The deadline to apply for a PPP loan has been extended to August 8, 2020, with over $134-billion in loan dollars still available (as of June 27, 2020) to businesses that qualify.

Legislative Changes on the Horizon 

Policymakers at all levels, from municipal leaders to the federal government, are watching the COVID-19 situation evolve so they may respond accordingly. Many leaders are unwilling to completely lift their respective lockdown orders out of concern for public health and safety. In fact, some are strengthening restrictions as COVID cases are increasing in many parts of the country.

All this uncertainty has led to hundreds of millions of dollars in lost tax revenue. Now, members of the heavy highway construction industry are looking to the federal government for help. The American Association of State Highway and Transportation Officials (AASHTO) submitted a proposal to the United States Congress this spring requesting a $50 billion fiscal backstop. The AASHTO reports that about $17 billion would go toward the 2020 fiscal year while the rest would go toward the 2021 fiscal year.  

In addition to the PPP, the recent $3 billion stimulus package that came with the CARES Act offered financial relief to average American households as well as businesses across many sectors, and a second stimulus is appearing more possible with each passing day.

Ultimately, it is impossible to predict the effects the COVID-19 pandemic will have on American business for the foreseeable future. The heavy highway construction industry faces more uncertainty than most as states’ coffers dry up from low tax revenue and officials at all levels put projects on hold. Hopefully, things will change in the months to come and highway projects across the country can resume with confidence. But for now, contractors, and all of us, need to find a way to reach a comfort level with uncertainty as we all wait to see how the COVID pandemic continues to unfold.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.