BLOG: Deployment: Sustain or Suspend Your Business

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162SFS-Deployment-1Please Note:  This series, “Preparing your Business for Deployment,” is focused on our military entrepreneurs who may have to deploy.  However, the information and checklists would apply to any business owner who may need to take a sudden leave of absence from their business due to a life changing emergency.  It is suggested that all entrepreneurs should have some sort of plan in place in case they need to either sustain or suspend their business in their absence. 

Preparing for a deployment is a stressful event for any military member and their family.  However, for the military entrepreneur it is even more so and it is imperative to plan ahead.  So if you are an active service member, National Guard, or a Reservist you are encouraged to follow our “Deployment” series in order to have a plan for your business and ensure that both you and your family are financially secure.

Before building your plan, you first need to decide whether you will sustain your business (keep the doors open) or suspend your business (close your business temporarily or permanently).  In the first part of our series we will provide you a checklist to weigh your options and make a decision.  In future posts we will go into more details about what to consider and how to create the plan for your business in the event that you must deploy.

Comparing your Options Checklist

Whether or not you currently have orders to deploy, you must be prepared.   If you are undecided about whether to sustain or suspend your business, this chart will help you compare the pros, cons, and look at the reasons behind suspending or sustaining your business.

Suspend Your Business? Sustain Your Business?
You do not have a plan in place and are not prepared to sustain your business during deployment. You have a deployment plan that you have discussed with your employees and are ready to implement.
There is no one who could run your business while you are away. You have key employee(s) or family member(s), who could run your business while you are away.
Your business is based on a special skill or trade that only you can do. Your business could be managed and implemented by another person.
You and/or your family can afford to suspend your business temporarily. You and/or your family cannot afford to suspend your business temporarily.
You don't have the funds necessary to keep your business open. You have the funds necessary to overcome the costs of keeping your business open.
You have low overhead costs, so your expenses during suspension are low. Your overhead costs cannot be avoided even if you suspended your business.
You can liquidate or store your inventory at little-to-no cost while you are gone. You are unable to easily liquidate or store your inventory at a low cost until you return.
You can easily resume your business when you return. You would have difficulty resuming your business after an extended absence.
You have the cash reserves to resume your business when you return. You have the money to keep your business open, plus an emergency cash reserve.
You have loyal clients, customers, and vendors who will do business with you when you return. You would lose your customers, clients, and vendors if you suspended business, and would have a difficult time getting new ones.
You have weighed the pros and cons, including costs, and you truly believe that suspending your business is the best or only option. You have weighed the pros and cons, including costs, and you truly believe that sustaining your business is the best option.

Cost Comparison of Suspending/Sustaining Your Business

One of the major factors in determining whether or not to keep your business open during your deployment is the cost of sustaining versus suspending your business. To suspend your business, you will need to figure out how much it will cost to re-launch your business when you return. If you sustain your business, you will need to know what your recurring costs will be.

Use the list below to compare your one-time and recurring costs of business.  Add the costs in each column, and answer these two questions:

1. Will you have the cash reserves to cover the one-time costs to re-launch if you suspend?

2. Will you have the revenue to cover the costs if you sustain?

Suspend: One-time costs to re-launch your Business

 Cost ($) Expense Description
Acquisition of office space Cost required to build or purchase space or rental deposit to be paid
Office equipment Computer equipment, printers, fax machines, telephones, and telephone system,copier machines, and other equipment needed to operate your business
Production equipment Machinery and other equipment required to produce your product
Office furniture Desks, file cabinets, bookcases, chairs, tables, shelves, counters, cabinets
Transportation and installation of equipment Shipping costs for furniture and equipment, IT, specialists to install hardware or set up phone system
Decorating or renovating Any renovation or remodeling needed on the space before opening
Signs Signs needed for outside office, on doors, walls, or otherwise
Security Either a security system or hired security service if not provided by building
Initial product inventory Costs required to stock initial inventory, including material and production, costs, until revenues pay for additional inventory
Insurance Premium required to pay before opening business for property and other insurance
Advertising Initial advertising done prior to business opening
Custom supplies Printed letterhead and business cards with company name/logo
Utilities Security deposits or installation fees for utilities and other services
Professional fees Up front fees to legal, financial, and other professionals
Business licenses and permits Fees determined by city/state for doing business
General office supplies Paper, pens, staplers, binders, paper clips, etc.
Service providers Fees for services such as cleaning
Other Additional costs not on this list
$ Total start up costs

 

Sustain: Recurring costs for keeping your business open

Cost ($) Expense Description
Employee wages Monthly payroll
Payroll taxes Monthly employer-paid taxes for employees
Health insurance Health insurance for employees
Workman's compensation insurance State required workman's comp insurance for employees
Monthly rent or mortgage Rent or mortgage payments
Security fees Security system or hired security service if not provided by building
Business insurance Signs needed for outside office, on doors, walls, or otherwise
Replenishing office supplies Paper, pens, staplers, binders, paper clips, etc.
Lease payments for equipment Monthly fees for leased equipment
Inventory replenishment Costs required to restock inventory, including material, and production, etc.
Monthly advertising Monthly costs for ongoing advertising and promotions
Utility payments Monthly fees for utilities and other services
Travel transportation Expenses involved for travel or transportation of goods
Professional fees Monthly fees to legal, financial, and other professionals
Bank service fees Monthly charges for banking fees
Credit card processing fees Fees required for processing credit card payments
Service fees Fees for services such as cleaning
Other Additional costs not on this list
$ Total start up costs

 

Hopefully by now you have a good idea about whether you should sustain or suspend your business in case of a deployment.  So to help you prepare here is a list of what we will cover throughout this series:

1. Legal and Financial Considerations of Sustaining Your Business

2. Employee Plan & Security Issues in Sustaining Your Business

3. Mapping out a Timeline for Suspending Your Business

4. Employee Plan, Inventory, & Re-Launch for Suspending Your Business

5. Deployment: Final Considerations

6. Deployment Checklists

References

The Veterans Corporation (2007)