Michael Bosma: COVID-19’s impact on business in Nevada
Covering Your Assets
EDITOR’S NOTE: This Voices column will be published in the Wednesday, March 18, print edition of the Northern Nevada Business Weekly. It was filed on March 11, and went to press March 13 — due to the fact the NNBW’s print edition goes to press a full five days prior to publication date. It was published prior to President Trump issuing a national state of emergency, in addition to a slew of important updates from the state of Nevada and other government agencies throughout the weekend and into Monday. The COVID-19 pandemic is an unprecedented global event, and the situation is fluid — please note that some of the information contained in this Voices column may have changed since publication, or is otherwise no longer relevant.
RENO, Nev. — Many business owners are concerned about how the recent coronavirus scare will impact their business, and their bank accounts. Here are a few thoughts to consider.
Now is a good time to review your human resource polices. Generally, entrepreneurs are empathetic to sick employees and their families. You may want to consider how recent changes in both Nevada and federal law have impacted your current sick and vacation policies.
Consider revising your policies to encourage people to take time off, rather than coming to work sick. One way to do this is to not offer to pay out vacation when someone quits.
Another common issue I see is lack of options for team members to work remotely. Now is a good time to look at technology options to allow people to have the same functionality working from home as their office.
Granted, I do get occasional pushback on this idea — considering the thought of paying someone to work while they are getting distracted by kids, pets or “The Price is Right.”
Be mindful that the office has its own set of distractions, including afternoon rubber-band fights, putting tape on an optical mouse, and casual water cooler banter. Perhaps working from home might be more productive after all!
Perhaps the best advice has more to do with taking advantage of your retirement account opportunities. Namely, if you have funds in an IRA, consider doing a Roth IRA conversion. Of course, talk to your financial advisor first!
Last Saturday, Lee Hernandez from Firmament Financial (http://www.FirmamentFinancial.com) was on my radio show (BosmaOnBusiness.com). He said trying to time the market was difficult at best, and preferred a logical, tiered-conversion strategy.
Let’s say for example you wanted to do a Roth IRA conversion on $50,000. Lee recommends it would be better to do monthly conversions of $10,000, rather than a lump sum of $50,000. That way you ride the market up or down, rather than trying to time the market.
If you don’t have a retirement account, now is a great time to set one up. Wouldn’t you rather buy when things are on sale?! That said, it’s best to discuss fees and costs for a plan before you dive in. There are now 401K plans with very reasonable annual fees. Unfortunately, if you don’t ask, you may get a surprising bill in the future, which would have made you want to set up a lower cost plan.
In terms of travel, as of this writing (March 11), the Centers for Disease Control and Prevention (CDC) listed China, Italy, Japan, South Korea and Hong Kong as having widespread risk of transmission.
I did a quick search, and I could get a round-trip ticket to Dallas with only 10 days’ notice for $215. The airlines are also (at least for the time being) being very accommodating with changing your flights.
As a result, now is a fabulous time to meet with your most important clients and vendors and assure them that everything will be all right. I do not recommend, however, going anywhere — including in public — if you have even a case of the sniffles. You will get sick-shamed!
Lastly, have a good handle on your cash reserves and cash requirements. I was speaking to a friend who had an events business. She was concerned that her clients would cancel events that she was planning on to keep her team busy.
When 9/11 happened, and travel was completely shut down, it virtually crippled many businesses that relied on vacationers to make a living. I believe that fortunes are made in calamity rather than calm. My counsel to my friend was to keep a very close eye on staff utilization, making sure that there is no down time, and not to be shy about having people take time off if business gets soft.
Having real-time information, and being able to act quickly, can make or break a business. Also, keep an eye out for new business opportunities. If events staff here aren’t able to work events, can they become delivery drivers for people who are in need of supplies but can’t venture out because they are sick?
The options are endless. Entrepreneurship is about making lemonade out of lemons!
Please note that this discussion is general in nature, and not intended to be tax advice. Please consult with a CPA to get answers to your specific fact pattern.
Michael Bosma, CPA, is Principal-in-Charge of the Reno office of CliftonLarsonAllen LLP. His NNBW column, “Covering Your Assets,” focuses on effective planning strategies for every business owner. Reach him for comment at email@example.com.
“I point out many cases of where privately owned companies do just as bad a job as publicly owned companies,” says Reno resident and former teacher Robert (R.D.) Gardner.