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Sunday, April 12, 2020

Payroll Protection Program and thoughts about tough times in the Catskills

Happy Easter - here are some bible verses for the day courtesy of - wait for it - Country Living Magazine -

Yesterday, the sound and shrieks of sirens abounded.  It was frightening and LOUD, much louder than your typical emergency response.  Turns out, it was the Easter Bunny making her rounds on the 6 truck convoy.  Now, I may be just an old fuddy duddy, but shrieking sirens when everyones' nerves are on edge is not my idea of a party, though I appreciate the gesture.  I don't think most people knew what was happening so 'major emergency' was the primary thought.

So, I'm at an interesting juncture of my business journey to watch this virus calamity ooze through the economy and fabric of American life.  1, I'm not directly impacted on day 1 so I have some distance and hence some clarity, 2, I run a $8m / business so I have some sort of financial sophisticated lens to view this from, 3, I'm a student of both history and economic history, so I'm well-versed in panics and downtowns and how they play out, 4, I'm a student of small business, and know the terrain on which these companies tread very well.

First, wow, how can you group a $45k revenue business with no employees with a company that has 499 employees?  There is just nothing in common.   I don't who defines small business as companies with less than 500 employees, but I certainly don't.  I don't see how the same 1 trick pony works for both groups.

Two, I applied for the PPP with the help of a local bank.   We are not in dire straits like many companies, but at some point we will be impacted.  Because our production schedule is lengthy, our impact will probably be felt in September, when the homes we would be starting or progressing on now would be hitting the market or selling - and the only litmus test was a self-certification that your business suffered 'harm' - I mean, really, few businesses didn't.  But applying for it made it apparent how poorly thought out it was.  Sure, I get the idea that help was needed fast, but as I read through the program, it just feels the only way to get it through quick without ideological roadblocks was just to include everyone (applies to the unemployment program too).

Then add on top of it an administration who made it a point to hollow out the expertise of every department of the government, and somehow they are going to be able to administer this program just made very little sense.  I'm amazed at a lot of businesses really think this money is coming, coming quick, and without too many strings.   That's not me.  If I actually get the forgivable loan, I''ll put it in a CD for 6 months until the government actually starts forgiving the loans, because why would you trust a President to look out for small guy and live up to his word when he made his billions by not paying people, and especially not paying the exact small businesses getting this aid.  So it wouldn't surprise me to see the rules change mid-way through the game, after all these business received and spent the money, to find out the loans actually come with a lot more strings than first mentioned, and hey, pay it back - you can't expect your fellow americans to pay your debts.  Who really has a hard time believing that isn't at least a possible scenario here?

The real problem I believe is that this administration just isn't honest - so they say the tests are coming, and they don't.  They say the stimulus checks are coming, but they don't.  They say the SBA will process the loans the same day, and they don't.   What we all need is a sense of getting a firm footing, not this sifting sand approach.  It might work in politics, but it doesn't work in business, where hard facts and data (along with the hard-earned gut instincts of the businessperson) drive decision making, and where an approach that strays from that - where optimism and wishful thinking overshadow the facts on the ground - well, that has never proven to be a profitable or safe route.  Acknowledging the reality of the situation, and planning and strategizing around it is the only way, painful as it may be.

I guess, since we were on a 9 year economic expansion, many businesspeople have never faced the real headwinds that aren't in their control - sure, all businesses fight for client acquisition, navigate employee drama, struggle with their cash flow - but these decisions are made easier when there is plenty of money circulating in the economy.  Now, take away an 'awash in cash' economy, and put that on your sandwich and eat it.  It's a lot harder, for the primary reason is, it's not nearly as fun to contract and protect and play defense as spend spend spend and brag all about it.

Anyone can look good in a strong and healthy economy.   You see who really understands the nature of effort and risk and perseverance when things get hairy.  Or as the dangerous book for boys instructs - "Don't Grumble.  Plug On."   Easier said than done for those who haven't faced much hardship.

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