March 30, 2020

COVID-19: Lessons for business owners from the Calgary flood

As appeared on CBC News

When the flood hit Alberta in 2013, it forced over 7,000 area businesses to close, ruined millions in inventory and property, and sucked hard-earned revenue down the sewer.

The history of similar disasters around the world painted a very scary picture for those small businesses; stats out of the United States told us to expect that 40% wouldn’t survive.

To people watching the disaster unfurl in Southern Alberta, that wasn’t acceptable.

I was fortunate enough to be part of a task force, consisting of over a dozen community organizations, that was tasked with turning that around. I talked to secondhand clothing stores, stamp makers and art galleries.

They told me heart-wrenching stories of the love, sweat and tears they had poured into their businesses for years, and were crushed to see them on the brink of failure.

In the past two weeks in the business community, we’ve been hearing eerily similar stories again of business owners unsure what to do or whether their businesses can survive. I’m here to say that the lessons we learned in flood, and following disasters can help your businesses recover again.

If you are one of those business owners, there is hope, and this is for you.

Right at the start, there are three calls every small business should make right now: to your banker, to your landlord, and to your insurance company.

I’ll break down each.

Your Banker

Know that your bank wants to help you. They have been specifically been given tools and direction from the government to help you. Every banker I have talked to says they desperately want your call. They want to use every tool in their toolbox to help your business stay in business, and they’re right. Do it. It will go much better than you think.

Your Landlord

After wages for people, rent is often the second largest cost a business faces. Your landlord wants to hear from you too. It’s to your landlord’s advantage: giving you a couple of months of free or deferred rent is a small cost in comparison to having a vacancy in this market. I hear from landlords that too often they get the call too late – only after the closed sign has gone up.

Your Insurance Company

I’ll admit, when I ran a small business, the first and last time I looked at our corporate insurance was the day we bought it. Dust off your policy and call your insurance company. You may be eligible for compensation for some of your losses, especially if you have business disruption insurance.

Next, I want to focus on mental health.

What we learned was that for business owners, taking care of their mental health was the last thing they worried about but was the first prerequisite to being ready to do the tough things they needed to keep their business alive.

It’s okay to feel sad, desperate or angry. This crisis was unexpected, and it isn’t your fault. If tackling those three calls above feels like a herculean task, talk to a counselor. It’s okay not to be okay.

Now, let’s talk about the government programs that have been lighting up your screens for the past week.

If you are lost in the sea of announcements, you are not alone. Every day seems to bring a new announcement or plan.  

Most small and medium-sized businesses don’t spend a lot of time thinking about the government. For most entrepreneurs, here are the three I’d suggest looking at:

  • Wage subsidy – On Friday, Prime Minister Justin Trudeau announced a wage subsidy of 75 per cent for employees you are able to keep on. This may help you keep more staff working, bring others back, and return to business more quickly. Also, for the first time, you as the business owner qualify for employment insurance. If you need it, apply for it, even if you never expected to use EI. 
  • Emergency credit – A new Canada Emergency Business Account benefit has just been announced that will provide loans of up to $40,000, interest-free, for a year. Details are still coming out about how to access that.
  • Delay payments – You can now delay a host of payments, including your corporate taxes, GST, utilities and WCB payments. This can help you keep some working capital around to make it through this time.

Lastly, every business should be asking themselves “how can I pivot my business model?”

I’ve seen breweries making hand sanitizer, photographers doing portraits from the street, gyms doing virtual classes or renting out their equipment for home use, and online conferences, courses, concerts, and jam sessions.

There is hope. In the floods, that 40% expected business failure rate was reduced to one percent. You have a great business. Get to work on it.

Scott Crockatt is Vice President, Communications & External Relations of the Business Council of Alberta.

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