Covid Impact

Dealing with  COVID fatigue unites business owners. If that sounds strange to you, let me make my case. I’m not doing this to whine, but I want business owners who don’t have an existing support structure to know that they aren’t alone. I facilitate several peer groups of business owners. For decades, we’ve met monthly to discuss trends and issues in our businesses. It is typically a lively roundtable. Hiring, termination, customers, vendors, regulation, new initiatives, and finances present themselves at most, if not all meetings. The First Wave At the beginning of the pandemic, we increased our meeting frequency from monthly to weekly. It really helped with the news pummeling us every day. First, we had sanitation and control of infection. What should we do if an employee was diagnosed? What were the guidelines, or more accurately, the current guidelines regarding quarantine? How serious was this? Opinions ranged widely on the severity and need for action. Then came the lockdowns. Who decided that this was within the power of a mayor? Like so many regulations, it seemed to come without any discussion of the impact on small businesses. We never “blamed” the medical community. They were told to recommend the best way to slow the virus’ spread. They did. Our meetings became both strained and strange. We started living in two worlds. Some businesses were decimated, others were setting sales and profit records. The Light in the Tunnel Then came the relief bills. How did FFCRA work? Who has the poster? Will our employees all choose to go home at 2/3 pay? (Not very many did.) We traded policies and memos from HR advisors, CPAs, and law firms. Then the CARES act. BAM! $2 trillion flushed through the economy like a transfusion. We didn’t talk much about EIDL. The need to pay it back from PPP proceeds and running out of money early on focused us all on the Paycheck Protection Program. Of the 28 participants in the groups (myself included,) all 28 applied for and received PPP funds. We all shared application information and intelligence on which banks were handling it best. Again, we had concerns that the $600 unemployment bonus would dry up the recruiting market. It made things a bit more challenging, but not insurmountable. Most folks seem to prefer continuing employment. People who seek to milk the benefits to the last dollar aren’t the ones we wanted anyway. Of course, watching the collapse of the antiquated government infrastructure for unemployment may have influenced applicants as well. We traded information on remote working. How to keep employees engaged? Tips on contests, productivity tracking, and virtual technology. Those in essential industries never stopped working (see my post on 

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ROBS – or use funds from their existing personal 401(k) or other retirement accounts as capital for buying a business.   In addition to creating cash flow and minimizing the use of debt, ROBS are an attractive source of funds unlocking value from an individual’s retirement savings to fund a business, what are the tax advantages that make considering a ROBS strategy worthwhile?  First, there is the aspect of tax deferral. Financing through ROBS avoids the early withdrawal penalty normally incurred when funds are withdrawn from retirement savings prior to retirement. When you use the capital from your 401(k) to fund a new income taxes or penalties, more money is available to go into the business, thus maximizing your available capital.  In addition to increasing capital efficiency, you avoid loan obligations because ROBS is not a debt product. It’s simply accessing the equity you already have built up in your retirement plan, so there’s no monthly repayments or interest like you would incur with a loan.  Accessing Business Capital Through ROBS  Here are some points to remember about how the flow of money works when using a ROBS strategy:  The new business entity to be funded must specifically be established as a C-Corp.  After a new 401(k) or profit-sharing plan is the business advisory space and how to implement a ROBS strategy. For a consultation on your business plans and objectives, please contact us at 770.740.0797 or email info2@SJGorowitz.com. 

As a small business owner, your instinct might tell you to seize every opportunity that knocks on your door. Let’s face it: saying yes can be a thrilling ride into new ventures. Sometimes, you need to remind yourself of your organizational Sweet Spot.  Does your team have the bandwidth, the people power, and the infrastructure to take it on? Sometimes, saying no is not just the better option; it’s a powerhouse move that aligns your business with your growth goal. Here’s the lowdown on when, how, and why flexing your “no” muscle is your smartest play. The Unmanageable Yes When you’re overcommitted and under-resourced, every additional yes is like adding more weight to an already overstretched team. If saying yes means sacrificing the quality of your work, spreading your resources thin, or burning out your team, then it’s time for a firm, resolute “no.” Remember, quality over quantity isn’t just a great saying – it’s the golden rule for sustainable growth. The Misaligned Opportunity Some opportunities seem golden on the surface, but they won’t help you achieve your business mission, vision, or values. Listen up: Your business is your compass; every decision should steer you to your true north. If it doesn’t fit, say no. It’s not just about avoiding the wrong turn; it’s about staying true to your course and your team’s potential. The Power of Prioritization Here’s a reality check—you can’t do it all. When you say no to less important things, you say yes to more focus, energy, and time for what truly matters. Embrace the art of prioritization because knowing what to decline is as vital as knowing what to pursue. Make your yes count! Cultivating Respect Saying no isn’t just about protecting your time and energy; it’s about setting boundaries. Assertiveness isn’t rude; it’s a sign of respect – for yourself, your team, and your business’s vision. When you respect your limits, others will follow suit. It signals to the world that your time, team, and resources are valuable. Conclusion Saying no is a tough decision. It’s not a negative judgment; it’s a selective choice. Think of the word no as a complete sentence and a powerful tool to guide your business to where it truly belongs. So, the next time you’re faced with a request that doesn’t feel right, plant your feet, take a deep breath, and remember that saying no is not just okay—it’s essential for your business’s health and ongoing success.   Do you need to get in your Owner Sweet Spot?

GAAP traps often occur when a business owner sells a company to a third party. The transaction is commonly memorialized by a Purchase Agreement. That agreement contains certain representations (or “reps”) and warranties. Some of these are common sense and should pose no problem to someone who has operated a good business. The Accounts Receivable represent money that is actually owed to the company. Taxes have been filed on a timely basis. The seller doesn’t know of any pending litigation. The owner has the right and authority to enter into a sale agreement. There is one, however, that is frequently required by attorneys who don’t understand privately held business, and agreed to by owners and their attorneys who don’t understand what they are guaranteeing. They are Generally Accepted Accounting Principles, or GAAP. What is GAAP? To start, the term “Generally Accepted” is misleading. It could easily be interpreted as “what everyone typically does.” Nothing could be further from the truth. GAAP is determined by two organizations, the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC). Per I

In the United States, as much as 75% of the workforce is paid biweekly or less often. For many workers, such a delay makes paying bills on a timely basis a challenge. In recent years, this point of pain has resulted in financial institutions providing paycheck advances before payday (“Earned Wage Access” or “EWA”). Earned Wage Access products are offered through two primary models: employer-partnered and direct-to-consumer. While employers sometimes make these fee-free, some Earned Wage Access products come with fees for expedited service, subscription fees, or requested “tips.” In response, the Consumer Financial Protection Bureau (“CFPB”) proposed an interpretive rule explaining that many (but not all) Earned Wage Access products are consumer loans subject to the Truth in Lending Act (“TILA”). The proposed rule explains how existing law applies to EWA, and replaces a 2020 advisory opinion that addressed a very specific paycheck advance product that is not common. The proposed rule makes clear that many paycheck advance products – whether provided through employer partnerships or marketed directly to consumers – trigger obligations under TILA. Specifically, the CFPB’s proposed rule makes clear that: Many EWA costs are finance charges: “Tips” and expedited delivery fees are finance charges under TILA. However, when EWA is truly free to the employee, there are no finance charges. Borrowers must receive key disclosures: Among other requirements, earned wage lenders must provide workers with appropriate disclosures about the finance charges. The proposed rule is unlikely to have an impact on employer obligations. However, companies that partner with earned wage lenders may want to inquire about the fees the lenders charge. Employers who partner with earned wage lenders especially should take interest in whether lenders charge consumers any fee, which would likely be considered a finance charge under the current interpretive rule. If so, the employer should ask the lender if they are providing the required notice. Even if the notice is not the employer’s obligation, knowing that it is being provided will avoid one more potential headache! The CFPB encourages the public to submit comments on the proposed rule to inform whether additional clarifications are needed. Comments will be accepted until August 30, 2024. Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560  

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