Question: Looking forward to the coming year and beyond what must a small business do to protect itself from the consequences of a prolonged pandemic?

Answer: If there is one thing we have learned from the year 2020 is that nothing stays the same forever. Who could have envisioned a world-wide pandemic? Many small businesses have taken a huge hit financially, and some may never recover. So, what are the lessons we can learn from the current experience?

In all my years as a SCORE business counselor I have always stressed the need to create a budget. A budget is a forward-looking projection of income and expenses. Income projections should be conservative and expenses as accurate as possible. This requires advance research. Once you have identified the known expense items you should also set aside a reserve for the unknown, a minimum of 10% of annual expenses.

The reserve account should accumulate over time so that you can cover up to a six-month interruption of business. Covid-19 is but one such interruption. What would you do in the event of a devastating fire or flood? And how about a riot and civil unrest that destroys property and instills fear in your customer base?

These same events could also affect your supply chain. Even if you do not sustain direct damage your business can come to a screeching halt if you are unable to receive shipments of necessary goods, parts and equipment. This problem can be mitigated by having relationships with more than just one supplier.

In addition to establishing a cash reserve for unknown contingencies you should also have in place a bank line of credit. A LOC should only be used in emergencies and you will not incur interest until you draw upon the line of credit.

Make sure you are adequately insured. In addition to coverage for direct physical loss you should also include business interruption and extra expense insurance. Business interruption reimburses you for the loss of income you incur while you rebuild. Extra expense covers those expenses you incur to rent temporary space and other expenses that enables you to continue serving your customers until you are able to resume normal operations.

There is an old saying “fool me once, shame on you; fool me twice, shame on me”. Cash is king and unless you have adequate insurance and establish a reserve for contingencies, you risk the loss of loyal employees and valued customers.

SCORE has a twelve-month cash flow template you can use to set up your budget for the coming year. It can be accessed at


Gray Poehler is a volunteer with SCORE Naples. Business counseling on this and other business matters is available, without charge, from the Naples Chapter of SCORE. Call (239) 430-0081 or visit .The SCORE business office is located at 900 Goodlette Road North, in the Fifth Third branch bank building. Office hours are 9 a.m. to noon, Monday through Friday.