5 ways for businesses to cope with a coronavirus shutdown

Photo of a business owner who is coping with changes and shutdowns amid coronavirus.

Like business owners everywhere, Brian Snyder had drastically different plans for his concrete contracting firm before the coronavirus pandemic struck.

Snyder, president and co-owner of Architectural Concrete Solutions Inc. in Columbus, Ohio, had just reactivated his staff of 18 from their routine seasonal winter break. One crew this week has been pouring concrete at the city zoo—even though the zoo is closed to visitors, as institutions of every kind shut down to encourage social distancing and stop the spread of COVID-19.

“Many people, many small businesses are literally month to month, week to week,” Snyder says. “The devastation of this—you can’t calculate it.”

Businesses with fewer than 500 employees—such as Snyder’s, a Principal® 401(k) client—represent 47% of private sector jobs (PDF) in the United States. Since 2000 they’ve generated 65% of net new jobs.1

The pandemic’s potential disruption to the entrepreneurial frontlines of America can’t be understated. U.S. Treasury Secretary Steve Mnuchin said that without government intervention, the nation’s historically low unemployment rate could jump to 20% depending on how events unfold.

But help is on the way: The president and Congress, in coordination with states, have fast-tracked measures to support businesses and try to prevent the pandemic’s worst economic side-effects. Business owners can use the help; the endless variety of logistics they normally juggle suddenly has been magnified.

Help is on the way: The president and Congress, in coordination with states, have fast-tracked measures to support businesses and try to prevent the pandemic’s worst economic side-effects.

5 ideas to help you navigate COVID-19 social distancing and shutdowns

“There are so many unknowns right now that I have to deal with,” Snyder says.

He’s not alone, as our nearly 200,000 business clients of all sizes worldwide could attest.2 Here are five ideas to help you and your business navigate the complications of the coronavirus shutdown and tap into new U.S. government programs:

1. Make your business operations safer.

There are so many unknowns right now that I have to deal with.”

Brian Snyder, president and co-owner of Architectural Concrete Solutions Inc.

Nearly every company—Principal included—has restricted business travel and access to offices and established a widespread work-from-home policy. Even a construction company that can’t avoid on-site work can take precautions: Snyder and his company have enforced stricter handwashing, removed communal water jugs, and required each worker to carry an independent water supply.

2. Pivot to more of an online or alternative business model.

The restaurant industry with its national workforce of 15 million, on the frontlines of the first wave of shutdowns and layoffs, has been a model of ingenuity. Many restaurants whose revenue had been focused on dining rooms have shifted to curbside take-out or home delivery. Other businesses may need to make a similar move appropriate to their sectors. Snyder and his concrete company are adjusting their business plan to rely on less of a residential market, as individual’s budgets leave little room for decorative concrete for their backyard patios. 

3. Tap into emergency savings or collateral.

Snyder, now age 49, years ago was forced to sell his first construction business at a loss in the wake of a family medical emergency. That motivated him to build up substantial savings for his current business to help buy out competition, earn vendor discounts through bulk purchases, or weather an emergency such as this pandemic.

“It’s extreme,” Snyder says of his cash savings. “You don’t really get it until something catastrophic happens to you.”

Mark West, national vice president of business solutions for Principal, says that enduring the 2008 financial crisis spurred many businesses to build up larger cash reserves. Others were able to borrow from their cash value life insurance and use their policies as collateral to “help get bank loans or lines of credit to get them through a rough spot”—a strategy that could help now.

4. Turn to surprising sources of emergency cash, such as Facebook.

The social media giant has dedicated $100 million in grants that it will divide among as many as 30,000 businesses across the 30 countries. An emergency cash infusion—maybe even crowdsourced from appreciative clientele—could be feasible for some local businesses.

5. Stay up to date on how the government is trying to help you and your employees.

Think of the new emergency federal assistance to businesses and workers in three phases:

  1. The first phase included low-interest COVID-related disaster assistance loans for businesses from the Small Business Administration—a 3.75% interest rate for businesses or 2.75% for nonprofits.
  2. The second phase is the $100 billion Families First Coronavirus Response Act passed and signed March 18. This is more focused on employees of companies with 500 or fewer workers.
    • It provides free COVID-19 testing and expands food assistance.
    • It extends two weeks of paid sick leave (up to $511 per day) for those suffering from the virus themselves or seeking a diagnosis.
    • If caring for an individual who’s sick, the benefit must replace at least two-thirds of the employee’s wage (up to $200 per day).
    • It also adds up to 12 weeks of family and medical leave for an employee with a minor in the event of the closure of the child’s school or place of care paid at two-thirds the usual rate (capped at $200 per day).
    • Employers providing leave are reimbursed by the government within three months through payroll tax credits. And employers with fewer than 50 workers can apply for an exemption if the additional expense would threaten the viability of their business.
  3. The third phase under proposal could include $300 billion in small business loans as well as $50 billion for airlines, $150 billion for other "severely distressed" industries, and direct payments to individual taxpayers.

This federal government response to the COVID-19 economic crisis is being quickly assembled piece by piece, West says, “and hopefully all of this comes together as a complete puzzle without any missing pieces.”

Among other resources available to business leaders, the U.S. Chamber of Commerce has its own list of “8 things your small business needs to do.”

Graphic of a thumbtack. A note on pay and benefits

Businesses also should consider how they may want or need to adjust their benefits package offered to employees to weather an economic downturn or a shutdown. For instance, if all employees are placed on unpaid leave, that doesn’t require you to continue to provide employer contributions to a retirement plan. But paid leave does. Meanwhile, a shutdown in operations doesn’t necessarily mean you have to freeze your plan. Every company’s circumstance can be unique, particularly in such a volatile crisis. Reach out to your advisor with detailed questions.

What’s next?

  • Visit our resource page for our latest market updates, information for individuals and families, insights for businesses, and an outlook for financial advisors and institutions.
  • Are you a Principal business client with a retirement or benefits plan? Reach out to your advisor or Principal representative for answers about your specific situation.

1 U.S. Small Business Administration, September 2019.

2 Principal reporting as of December 31, 2019.

Architectural Concrete Solutions Inc. and Facebook are not an affiliates of any company of the Principal Financial Group.

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