COVID-19 & Your Small Business

Episode 110 on the Business Bites Podcast

The Gist Of This Episode: Coronavirus (COVID-19) is wrecking havoc across the world, impacting small business cash flow and driving fear into small business entrepreneurs. This quick podcast episode runs through five top checklist items to take action on today. These include how to invoke insurance coverage, identifying contract issues, money cash flow restrictions and more!

Photographers – view the FAQS on COVID-19 here.


What you will learn:

  • the importance of understanding the language in your contracts
  • the types of insurance you should consider
  • what force majeure is and the checklist to use if an event may be considered a force majeure event
  • ideas of some things you can do in your business during the downtime
  • and more!

Expand To Read Episode Transcripts

Cancellations, reschedules, loss of income, sickness, no toilet paper, everything’s being canceled. It’s craziness right now. This episode is going to walk you guys through the impact that the coronavirus could be having on your small business. Before we get into this episode, episode 110, I want you guys to stop, take a deep breath and understand that it will be okay. If you approach this from a smart fashion to protect your business and take this time to learn lessons of things that you didn’t have in place, then you’ll set yourself up for better success, should, and if, and when this happens in the future. Join me for today’s episode. We’re going to be talking about how to combat and work through the coronavirus impact on your small business. This is also going to be applicable to any natural disasters or other things that may come down the line. Join me.

Welcome to The Business Bites Podcast, the podcast for busy entrepreneurs. Whether you’re an online entrepreneur, or seeking after brick and mortar success, this podcast brings you quick bites of content so you can learn and grow anywhere you are. Now here’s your host, Rachel Brenke.

Hey guys, welcome to episode 110 of The Business Bites Podcast. I am your host, Rachel Brenke. As always, trying to bring you guys the quick and direct information to help you with your small business. This is super timely. I am recording this episode during the week where literally everything has shut down. I mean guys, when Disney World shuts down, you know ish is hitting the fan, okay? Whether it’s media-driven or actually really happening in real life, it doesn’t matter when it comes to our small businesses. Because why? I mean, it does matter to life. But why? Whether it is a pandemic, epidemic, the world is ending. Guess what? It’s going to impact your small business no matter what. No matter where you fall and how you feel about the coronavirus, what the media is saying and everything that’s going on. I’m going to give you guys a quick checklist of things that you can go through to make sure you keep on top of for your business.

Keep in mind, now I’m talking about COVID, the coronavirus in this episode. You can use this for anytime in the future when we are talking about or going through natural disasters or other situations that arise because it is life. It does happen. The show notes for this episode will be found at I really highly encourage you guys to bookmark this, favorite it, and share it with your friends. I’m seeing a lot of misinformation out there and I’m seeing a lot of confusing information. My goal is to make this very quick and very painless as possible because I know you guys have some doomsday prepping to get focused on. I might chuckle about that because I think about the lack of toilet paper in the grocery stores right now, which won’t be funny if we end up having to be without them.

Is your small business going to be impacted? Again, like I said, breathe. We’re going to walk through a checklist. The very first place that I want us to start. If you are in business, you should have insurance policies. I have talked about insurance in the past on this podcast. I’ve talked about it in my courses and my blogs. If you haven’t checked all of them out, obviously, shameless plug, you need to. If you’re sitting there thinking, well, I don’t have any business insurance, now’s the time to listen to this. Jot down some notes and go get some. If you do have business insurance, here’s the things that I want you guys to ask for. Keep in mind I’m going to list different types of policies and may not necessarily be what your insurance company is calling it. It also may be something that’s within a regular policy.

For example, business interruption insurance. Some companies may break it out, so what is it called? Business interruption insurance. Some people have professional indemnity insurance and it’s included within that. The end game for business interruption insurance is to provide you compensation potentially depending on how the policy is written for loss of cashflow, loss of business that occurs due to a specific interruption, however the insurance policy is drafted. You wanted to see about business interruption. Another thing that you want to look at is key person and or short-term disability. Maybe you’re somebody who ends up sick in this situation. Look to see if there is a way that you can recover lost income under key person or short-term disability insurance. Keep in mind guys, if you don’t have these already in play, you can’t call and ask to get it and invoke it right away.

They’re probably going to exclude you. If you don’t have it, note it down for next time. These are not the be-all and end-all of insurance policies to have. These are just the key ones right now. Business interruption for interruption of business because you may be losing some customers. You may not be able to meet with clients. Then if you get sick, you want to look at having key person or short-term disability in order to cover for the lost income during this time. Number two, and this is the big bulk of the questions that I’ve been getting is contracts. What do we do with contracts? Especially if those of you that are in services-based business. Here’s the deal. There is a variety of provisions that can be in your contracts that can directly impact and provide you help if you’re having to cancel, reschedule or whatever it is that you’re doing. Whether you’re a coach that meets clients in person, maybe you’re a fitness trainer, maybe you’re a photographer, right. Let’s look at our contracts and identify the language for some of these specific provisions.

These are not all of them, but these are the biggest ones that I’ve seen. Cancellations, self-explanatory. Rescheduling, self-explanatory. Sick, self-explanatory. Substitute, maybe you’re a photographer and you have a wedding contract and you allow for substitute photographer. That’s something you could potentially invoke here. The last is called a force majeure provision, and that’s probably where majority of your questions are. We’ll get to that here in a second. Just understand before we go into this, you may pull your contracts and look at the language because that is how you’re going to determine if they apply or not. I can’t sit here and say, yes Timmy, your contract with the cancellation provision, if it says cancellation, it applies. Have to know what the operative language says. How do you invoke that provision and does it apply? Understand, just because you evaluate your contract right now and go, well, in here it requires A, B and C, but A and B have happened but C hasn’t happened so I can’t invoke this provision.

Such as like force majeure, which we’re going to talk about here in a second. Doesn’t mean that in a week it won’t and you won’t be able to invoke it. Okay? Understand with this, this is a living, breathing thing you guys need to keep reevaluating. The impact of cancellations or reschedules specifically can also impact whether or not you need to refund any monies. All of that’s going to depend on already executed contract language. Identify that section in your contract as to the availability of these options. Keep in mind, even though it is not in your contract, you and the other party may mutually agree to reschedules or to cancellations of the agreement. Right? Just understand, even though it’s not in there, your client or customer may want to reschedule or cancel anyways. The tricky part often comes in if one party wants to cancel and monies were paid and they want their money back.

Typical situation. This is like with a wedding photographer. Maybe people have paid money towards a wedding that’s supposed to happen in the next few weeks. They want their money back. Without going too far down the path on this, I’m going to add some frequently asked questions into the episode show notes. Again, I’m going to use a couple of variations for different industries. For a wedding photographer, maybe they’ve paid, they paid a nonrefundable retainer up front to book it and you have operative language that allows you to keep that money for reserving the date. Then maybe now we’re looking at having the wedding in a couple of weeks, but everything’s getting canceled. How much do you refund? Do you refund it all? Well, more than likely you’re not going to get to keep it all because you didn’t run through all the services. This is where you sit down, you have your legal counsel with you. You identify and you talk with your client to of what monies you’re able to keep and not, and also depends on the operative language within your contract.

All right. I’m going to reiterate again here. Remember, you can always reach out to the client and talk. You can always go above and beyond your contract. You need to start with knowing what’s legal in your contract, how the language impacts, whether it allows for reschedules, whether allows for cancellations and all of that, as well as knowing your rights but you can go above and beyond. You can offer customer service. If you want to refund it all, you can. Just understand that could be loss of money. Now, the one type of contract provision that a lot of people are really revolving around is force majeure provisions. This is something that I’m going to have to update. I’m going to have to come back to this because like I mentioned, circumstances may change. The first step to determine whether your contract contains this force majeure provision is going to identify, well, you have to identify if it’s in there. What a force majeure event and what this provision does, it allows for non-performance of a contract under a certain event.

This can include your provision having a list of items which are not anticipated as the date of the contract. More than likely when you entered in that contract with your client, you guys did not anticipate coronavirus happening. The second thing of the contractual definition of force majeure event is that it’s beyond the party’s control. Obviously, for the most part, coronavirus is without our control. There’s precautionary measures we can take, but we can’t control it. The third is that the event was not caused by the fault or negligence of the party seeking relief, whether directly or indirectly. Now here, probably pretty confident to say that it’s not going to be caused by the fault or negligence of either party. I guess unless you walk up and kiss someone who has coronavirus. I don’t know. That’s pretty far-fetched trying to have a little levity of the situation here. Not really probably going to apply, so more than likely it may fall under this.

The last part of the legal contractual definition of force majeure event is if it either prevents or delays the affected party from performing its contractual obligations, which is why we’re here. It’s beyond party’s control. It was not caused by fault or negligence of the party, can either prevent or delay the affected party from performing its contractual obligations. The question would be, is it a part of that list of items that were not anticipated as of the date of the contract? We have to look to your specific language. Okay. Force majeure events or circumstances that render performance inadvisable, commercially impractical, illegal or impossible. Understand though this isn’t a be-all and end-all. Just because you have the four bullet points, the list of items, beyond control and not caused by fault negligence and either prevents or delays the affected party.

Just because you have all of that, you have to understand that these provisions are going to be narrowly considered and must be drafted properly to encompass coronavirus specifically or at least language to include pandemic, epidemic disease, et cetera. The fact that a contract contains this doesn’t necessarily mean that you have a contractual right to invoke it as a result of impacts to your business for the virus. The specific language is going to determine that. My recommendation is to right now pause this. Seek local counsel immediately to see if your force majeure clause does apply or does not. Here is why. Your reschedules, your cancellations and all those other policies may or may not apply. Especially if they don’t apply. You want to get advisement and understand what’s in your force majeure clause because like I mentioned before, it may not apply now but it may apply in a couple of weeks. Because if your contract appears to contain this language that applies to circumstances your business is experiencing as a result of the coronavirus outbreak, we have a list of several factors to consider before declaring this an event.

One, does the provision require you to show the event could not have been mitigated by preventive action? Two, are there other provisions that can be invoked? We already talked about that. Three is really where I’m focusing. Has the government issued specific classifications and requirements? Essentially, step back and identify how government agencies are treating the outbreak. How are organizations like the Centers for Disease Control and the World Health Organization, CDC and WHO, how do they classify the outbreak at the time that you want to invoke the provision? That may or may not support your claim for that of a force majeure event. All of this is going to circle back around to the language that are in your actual force majeure contract. I understand I just said a lot. Quick little recap. If the event, this coronavirus fits into the contractual definition of a force majeure event, if it renders the performance inadvisable, illegal, impossible, commercially impractical, it may apply.

Then you also have to determine if does it now apply under how government agencies are treating the outbreak. Maybe that will end up changing as we see an increase. If we do, hopefully we don’t have an increase in people being sick. Keep in mind, not all force majeure clauses are drafted the same. Do not rely on the advice of others, articles, even this podcast and non lawyers. You need to get specific advice on your drafted language. Again, cannot enforce this enough. Even if you are unable to use force majeure today, this does not mean you won’t be able to. If the circumstances change in the future days or weeks of the coming time. Even if you have a force majeure clause, you have a duty to mitigate damages. This means that you need to talk to your contracted party immediately. Take use of travel company refunds within timelines, provide proper notices. This is not a get out of jail free card. You don’t just simply get to say force majeure and I’m done.

Now, if you’re freaking out going, oh my gosh, none of the provisions on my contract helped me, what else can help me? Even if none of your contract provisions aid you in rescheduling or canceling, there may be defenses to non-performance such as frustration or impossibility. Fine. If you’re sitting here freaking out going, oh my gosh, none of my contract applies or I don’t have a written contract, I have nothing to look to, not all is lost. Again, let’s go back to human. We can talk with our contracted party. We might be able to work something out, but if it doesn’t, also consider you may have defenses to nonperformance. If you’re just not able to fulfill your agreement to your contracted party, to your client, you may have the legal directions of frustration or impossibility on your side to defend you in cases where you’re not able to perform. Just a little recap on the contracts. Identify your language for cancellation, rescheduling, sick, substitute person, and force majeure provisions.

They may apply if you’re unable to render services or products. Stay on top of it. I’ve said that over and over because if you want a client decide, oh, let’s wait it out to see what happens. Situation may change. You may be able to invoke a right later on. Third thing on our list here, make a checklist of things that you can do during your downtime. All right. We’ve gone over checking your insurance policies, checking your contracts. Make a checklist of things that you can do. If you are in a position where you’re having to cancel events or you’re not able to do business, employees can’t come in, customers can’t come in. You can do things during slow business time. Use the time to market and strategize, content create, make network connections. All of this can be done virtually. Fourth on my list is savings. Guess what? Now might be the time that you need to tap into your savings. This is what you’ve been saving for. I’m going to link on the show notes,

I’m going to link on the show notes a couple of our episodes regarding specifically on savings and budget as well as insurance and contracts. The reality is many small businesses are going to see a decline in cashflow. You might want to take this time to identify your budget and if you have any savings available and project your cost to make sure you’re able to cover everything. Last and certainly not least, protect yourself and your team members. There’s exhaustive lists all over the internet of ways to physically protect yourself out there. I also want you guys to make sure that you’re mentally and emotionally taking care of yourself. Find ways to stay active even if it is going for a walk away from others, staying home, reading a book. Make sure that you are keeping yourself grounded and focused. Use this time. Don’t stress out. We’ve got this.

Now, I’ll tell you what, really quick episode because that’s the format of Business Bites. We are going to have a discussion in The Business Bites Facebook group. There’s going to be a very specific thread to it. If you are a photographer, we also have one for TheLawTog® group. Just search those on Facebook. Please come join us. I am going to be digging in as much as I can. I am working with my own clients, evaluating their contracts, advising them right now in this flurry of stuff. I and my team will be in there answering questions, help you guys. Please don’t forget to share this episode. It is applicable now during this coronavirus stuff and is also applicable for the future. Please don’t forget to subscribe and leave a review. Having a reviews on our podcast wherever you listen to, it really does help because it gets us in front of other people to be able to help them be protected and to help in situations just like this. Good luck.

Thanks for joining Rachel on this episode of The Business Bites. For show notes, a list of recommended tools or referenced episodes, you can find them at Until next time.

Hi, I’m Rachel Brenke

Rachel Brenke

As a mom, team USA athlete and cancer-survivor, I want a real life while I have a real business.  This is why my resources don’t promote hustle-culture, rather tough-love and no-holds-barred tips to achieving both.  In addition to this website, I have a top-ranked business podcast, been featured in places like Forbes and work 1:1 with so many of you.

Enough about me though. I am proud of you for pursuing entrepreneurship. It is rewarding and amazing.  Keep at it!

Now enrolling: RealBiz Accelerator[GET INFO]
+ +