We all entered 2020 thinking that the year is going to be a blast. The business and economic sector, specifically, has marched into this year with more enthusiasm as compared to the previous years. Plans of expansions and employment for some specific branches within the economy are marked and plotted – in assumption of a smooth flowing year. All of these plans are because of the promising forecasts and implications from 2019’s economic stats.
At the beginning of the year, the hotel, travel, and retail industries in the US alone have recorded peak when it comes to construction, employment, and sales.
These plans are yet to commence when Coronavirus (COVID-19) entered the scene.
At first, the sector that was directly affected by the virus is the health and wellness sector; however, we all know that each sector that builds up a society can directly influence and affect the other sectors. This pandemic has caused multi-sectoral panic for almost every nation across the globe. Almost instantaneously, the economy of every affected nation started to decline.
The logic of how the virus has this certain effect can be interpreted in many ways. One thing that is sure, however, is that the economy relies on different players, each of them affects the next action of other players and so on – just like a domino.
Let’s take this idea into context.
During the first month of the pandemic, many business establishments and companies were compelled to temporarily close in order to abide with the advice of the government to stay at home and practice social distancing. Because of this, many people were forced or just chose to stay at home to keep themselves safe from the virus.
This event resulted in lesser and lesser cash flow for small and big retail businesses alike. The chain of events that have transpired for a few months have led to a great loss for many types of businesses and companies here in the US. The pandemic has forced many companies to close for weeks – or even months, and even worse, lay off employees. This significantly contributed to the sudden increase in the country’s unemployment rate. Many entrepreneurs and company owners have even allocated much of their budgets in searching for ways on how to continue business with respect to the “new norm”. Many have resorted to utilizing the internet as a means of continuing business. This, however is not feasible for all types of business – especially for businesses who are operating in the leisure, tourism and hospitality industry.
Now, since unemployment has continued for several months, it has resulted in people no longer having enough savings to buy goods (an impact to the retailers) and some would not be able to pay their rents. Even if the businesses are already starting to pick themselves up and are having more innovative ways on how to deliver products and services if the majority of consumers are still unable to avail the products, the flow of money within the business will still not be enough for a bounce back. Because of this, many businesses face threats of bankruptcy.
Basically, it’s all just a cycle. It boils down to the basics of interaction within the “production-distribution-consumption” circle. Unemployment means no money for the consumers to avail of the services and products of producers and distributors. No sales from producers and distributors means no cash flow within the business. No cash flow within the business may result in enterprise immobilization or worse: bankruptcy.
There are many economic experts who say that these events may even result in a “hangover” before the economy fully heals and runs normal again. Until the foreseeable future, observation of social distancing and other cautionary practices are the arising status quo. This is one factor that may greatly contribute to the speed of economic recovery. Given the case, bankruptcy and even a full economic plummet is inevitable.
Now, there are many things that a businessman can do in order to salvage what remains of the business before a full blown bankruptcy occurs. The Bankruptcy Code is one of the things that a businessman can resort to when this time comes. This is an active code in the US that helps business and company owners find ways to solve or smoothly phase through bankruptcy. In order to have a better understanding about how this code works, it is better to seek out the help of a professional Bankruptcy Attorney. Lucky for businessmen here in Baltimore, Richard Hackerman is here to assist! Speak with us today and have more ideas about the things that you can do if your business is facing bankruptcy during this pandemic.