What do you do in a STORM – a Financial Storm?

Everyone knows that in the case of a very bad storm that you “TAKE SHELTER” and take every
precaution that you can to avoid placing yourself or your family in DANGER. This Pandemic is
worse than anything that we have had to face, including the great Depression of 1929 – since
this is a LIFE THRATENING event, and has already caused the death of thousands of people
worldwide. So I am going to focus on WHAT you can do “FINANCIALLY” to protect yourself
during this crisis. From a Business point of view, we are going to focus on what you can do to
not only keep your business up and running, but to find ways to stop the bleeding – let me
explain.

WHEN THE OUTFLOWS EXCEED THE INFLOWS, THEN YOUR UPKEEP BECOMES YOUR DOWNFALL

So, we are going to FIRST focus on your INCOME, then your Business EXPENSES and then your
Personal Expenses.

Income:
Depending on what you do creatively it is already possible that many of you have already seen a
decline in client work and the revenue that you generate from what you do. You are going to
HAVE TO BE 100% proactive, and literally call every client you have worked with and ask,
“WHAT CAN I DO TO HELP YOU? – rather than asking “IF YOU HAVE ANY WORK FOR ME? The
difference in how this is seen is huge and differentiates you immediately from others who are
simply calling to generate work. Offering to HELP gets you seen in a totally different light.

WHO CAN USE YOUR SERVICES: - You need to create an organic list of every type of company
that still NEEDS WHAT YOU DO – HEY ARE YOUR TARGETMARKET

One of the things you MAY NOT HAVE thought about is the idea of doing a BARTER – with
another entity whose products you can use in your day to day life. The great thing about a
BARTER is that the selling process is simple – there is nothing to sell – only to agree on a fair
trade.

Creating Income in times like this is a daunting process, but please know that the clients you
service that are still open for business, will more than likely still need what you do. THE REAL
KEY is “not” to call and ask “if they have any work that needs to be done, but rather call and
“OFFER TO HELP” – WHAT CAN I DO TO HELP YOU is going to get a far better response than
requesting work. Even if it means that you might have to reduce your fees in the SHORT TERM,
generating Income is far better than NO INCOME ALL.

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The Congress passes sweeping legislation that will pump trillions into the Economy, where
can you get HELP?

SBA Disaster Loans:

https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

https://disasterloan.sba.gov/ela/

https://www.sba.gov/funding-programs/loans/lender-match ($25,000 Bridge Loans)SHOW THE PDF

OF THE 3 STEP APPLICATION PROCESS - PDF on the desktop

Small-business interruption loans

Who's eligible: Businesses with 500 or fewer employees that continue to employ

and pay workers through the coronavirus crisis.

The government would provide loans to small and midsize businesses to prevent
layoffs and to continue paying employees. Individual loans could cover six weeks
of payroll, capped at $1,540 per week, per employee

Garrett Watson, a senior policy analyst at the Tax Foundation, told Business
Insider that the maximum loan amount would be the lesser of $10 million or a
company's average total monthly payroll cost for the previous year multiplied
by 2.5. If a firm wasn't in business in early 2019, the cost would be calculated
based on payroll from January 1 to February 29, 2020.

https://disasterloan.sba.gov/ela/Information/PaperForms

The government would provide loans to small and midsize businesses to

prevent layoffs and to continue paying employees. Individual loans could cover
six weeks of payroll, capped at $1,540 per week, per employee

How Much will I get from the Economic Stimulus bill

https://www.washingtonpost.com/graphics/business/coronavirus-stimulus-
check-calculator/

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BE SURE to make contact with you Banker and ask WHAT THE BANK can do to help you with
DBA Guaranteed Loans and access to the paperwork required – FILR BY JUNE 30 th 2020.

Be sure to use the Links above to apply for Disaster Loans (EIDL) from the SBA under what is
called the CBA – EIDL 7 (A) program!

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EXPENSES: - What is Measured Improves – Peter Drucker

One of the most important and critical things you can do now is to LOOK AT YOUR
OPERATING expenses for the last 3-6 months – by month. The first thing you will
be able to see is HAS THERE BEEN any significant increases in these Expense
Accounts.

STEP 1: SORT your Expenses by LARGEST to SMALLEST -

STEP 2: LOOK at the top 7-10 categories, and I am sure that they will be at least
70-80% of your total expenses

STEP 3: FOCUS on the top 50% of your overhead, as any changes to these areas
will yield the greatest savings and benefits

TOP 8 Expenses that make up 87% of the average person budget

1. Housing - this is likely to be one of the top expenses specially now in L.A.
with rents at an all-time high. Now is the time for you to MAKE CONTACT
with the landlord/owner and explain your financial situation to them. ASK
FOR a Rent abatement for the next 3-6 months – or until this crisis is over
and your business is back on track. The Mayor od L.A. has already spoken
about legislation that will prevent landlords from issuing evictions –
2. Transportation – Almost EVERT Car Loan Finance company is now offering
3 moths of deferrals and they will add it to the end of your lease, so MAKE
CONTACT as soon as you can – you can save a lot of money on this offer.
Don’t forget that your car usage has probably gone down and your gubget
for Gasoline, Repairs, Etc wiik go down as well.
3. Taxes – For now the IRS and State have pushed the4 Filing date to July 15 th
– and it would not surprise me if they give another extension (just like the
automatic 6 month extension that is currently in place)

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4. Utilities and Maintenance – Now is the time to call your cellular provider,
Internet provider, and Electronic and Gas company and “negotiate” either a
reduction in the monthly plan, or an extension of time to pay, or a
‘reduced’ amount on your utilities. In the City of Los Angeles, the Mayor
signed an Executive Order that will ensure that a utility will “not” shut off
your utilities for non-payment- BUT you must make contact with them
(long, long hold times)
5. Food - one good way to save on food is to try (is possible) to buy with other
friends at places like Costco, Sam’s Club, where you can buy in BULK and
save a substantial amount of money. You are going to have to be flexible
since not everyone will agree on every item, but the basics remain the
same, so please give it a try. I am eating less, and feel fine, and have lost
almost 30 pounds since this started, but still healthy.

6. Taxes, personal insurance, and retirement – take a very close look at your
INSURANCE costs, they are a BIG number. Make a listing of all the Insurance
policies that you carry, specially auto and see IF you have the best deal at
the best price. I have spoken about Income taxes above, and I will take as
many questions as you can throw at me after I am done. Trying to put
money away at this time, is something that you might want to STOP until
we get back to normal. The rates of return on the stock market are awful,
and the yields on Mutual Funds are staggering low. – SO WAIT THIS OUT.
7. Debt payments – Here I am speaking about ALL debt that you currently
have. So today sit down and make a LIST of ALL the Bedt that you currently
have as follows;
Type of Loan Balance Int. Rate # Months Payment
Car Loan
Student Loan
Bank Loans
Credit Cards -1
Credit Card - 2
Credit Card – 3
until they are all listed
Mortgage if you own)
Other Loans/Debts
*** Now look at the APR (Annual Percentage Rate) on each of these loans,
and CALL The Bank and try to negotiate a 3-6 month deferral – or a radical
reduction of the Interest rate, or an extension of the Term of the loan –
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 making the payments smaller. A GREAT WAY to save is to get a “Balance
Transfer” credit card, that will usually have a Zero interest rate for a period
of about a year. This way you pay no interest, **BUT** se sure to pay this
off by the end of the grace period or you will incur huge accrued interest.
The point is that you will save the interest completely.
8. Healthcare – this is a tough one to answer. This is one expense that you
MUST try to keep if you fall ill. However, some of you pay way too much for
healthcare, by NOT SHOPPING around. There are placed on the Internet
that will shop and compare plans for you, try them. IF you are lucky enough
to belong to a large group, then see if they have a Group Insurance
program available for a lot less money.
A: Rent – This is currently a huge cost in most cities and has risen to almost
40% of your total Budget. Even though the Mayor and City Council of Los
Angeles have puta moratorium on Evictions, the Apartment Owners
Association (huge and powerful lobby for landlords) have said the evictions
lawsuits will continue as normal, if a tenant does not pay his – her rent. But,
there is nothing to stop you from making contact with your landlord and
share your situation with them, and ask for a deferment of 3-6 months’
rent, and that will sign a promissory note for this amount and pay it back
when things return to normal. The landlord can still evict you, but do they
REALLY want a vacant apartment in this economy with unemployment
claims skyrocketing. Convince them that at least you are there taking care
of their property, rather than an empty apartment that might get broken
into by desperate people, causing the landlord huge financial damages.

IF you pay attention to these Top 8 expenses, you will be astounded at how
much money you can possibly save from your operating budget.

Now let’s look at your Business Break-Even:

In my Money Management online course at The Futur I spend great deal of time talking
about and explaining the idea and the concept of a break-even point. It is so crucial and
so critical that I want to go over it again here so that you can see how important it to
know this number.

The BREAK-EVEN point is that amount of Revenue that you generate so pay all the bills
and leave ZERO profit. Let me again show you how simple it is to calculate this metric.
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Break-Even = Total Fixed Costs divided by your Gross Profit Margin
The Gross Profit Margin is simply your Variable Costs divided by your Gross Income

Example: Simply Graphics Design has the following results for 2019;
Total Gross Revenue (Income) $145,000
Total Variable Costs (COGS) $ 61,300
Gross Profit $ 83,700
Gross Profit Margin is this easy $83,700 / $145,000 = 57.7% (.5772)
Simply Graphics has Fixed Costs $72,600 (Costs that do NOT vary with Income)
The BREAK-EVEN point is just; $72,600 / .5772 = $125,780
That is the amount of Revenue you must generate to BREAK-EVEN, ***BUT*** Usually
this number does NOT include
(i) Your Salary is you are a Sole Proprietor (and not on salary)
(ii) Any Income taxes that might owe if you made a profit – in this your Net Profit is as
follows; $145,000 - $61,300 (variable costs) - $72,600 (fixed costs) = Net Profit of
$11,100 on which you will pay Social Security Taxes, and Federal and State Taxes.

Let’s say that you Taxes come to $1,700 and you need a personal salary to pay your
personal bills of $45,000. Now the Break-Even has changed a great deal as follows;

Simply Graphics has Fixed Costs $ 72,600 +

Income Taxes and Personal Draw $ 46,700
Total ALL Expenses, Tax and Draw $119,300
Now divide this new number by .5772 (Gross Profit Margin) and you get a new
Break-Even of $206,687 or almost $81,00 more Revenue you must generate to Break-
Even.
NOW you have a “REAL TARGET” that you know you must reach in order to financially
SOUND. Use this TARGET as your Sales Goal – reframe is down to monthly goals of
$17,220 a month or just $4,000 a week. Looking at these numbers makes then seem
WAY MORE achievable and less SCARY. If the average job you did for clients was around
$3,500 then you need basically one client jot per week to reach your goal.

WHAT IS MEASURED IMPROVES – Peter Drucker

NOW I want to take your individual questions as I believe that as I answer them, they
will apply to a GREAT DEAL OF YOU today. There is NO better time than NOW to begin
to learn how to properly Manage and Run your business profitably, even in this crisis.
Many of you have had little or not financial training in your creative education process,
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so now might well be the BEST TIME to take advantage of the course offered on The
Futur – including my Managing Money course which will help to put you back in Control
of your business and your personal finances. I also understand the Chris has generously
agreed to give a discount to anyone who now takes any of these courses.

OK QUESTION TIME: For as long as Chris wants to keep this going – and if anyone needs
to have a more in depth Consulting with me, just reach out at errolg3@sbcglobal.net
and we can discuss how I can add value to your business with a Consulting agreement –
which we can so through Zoom or Skype.

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