COVID-19 – 8 Survival Tips for Cayman’s local businesses by Paul Byles

Restaurants and many other local businesses are now under unprecedented pressure. They will no doubt have to consider laying off staff. Ideally businesses will wish to avoid the situation of laying off workers and then having to recruit them 2 to 3 months later. But neither do they have the cash flow to keep staff on their books at current salary levels. Here are some ideas for businesses to consider which may delay/prevent a large increase in our country’s unemployment rate.

1. Draw on contractual leave arrangements – Negotiate with staff to take annual leave, sick leave and any other formal leave benefits. This will enable staff to continue to get paid while being out of the office in accordance with their current contracts.

2. Talk about salaries – negotiate (with supporting legal documentation agreed by both sides) to reduce salaries for a defined period (for example 45 days).

3. Maximise current cash flows - Offer gift cards at a discount. For example, restaurants and other local businesses can offer customers a 20 to 30% discount gift card for a 45 day period which they can use once the current restrictive measures have been eased. This will allow you to receive income now and if the offer is successful it may even provide some cash towards meeting your future expenses as well. You should also negotiate payment terms with your existing suppliers, especially the larger ones.

4. Talk to your bank - There is no guarantee that your bank will be able to assist you with short term financing, but this is an issue that you need to raise immediately with them. At a bare minimum, your bank will want to know your financial situation. Arrange a call with them or email them the status of things. This may lead to temporary suspension of your debt payments and in some cases you may be able to secure an overdraft depending on your existing performance record and situation.

5. Apply flexibility to maximise use of your staffing resources – Restaurants, for example can use existing waiters/waitress to do the take out deliveries. Other types of businesses may be able to find temporary roles for staff members. This gives you the opportunity to fill their contract hours. A potential issue is that you fall foul of immigration rules due to the need to strictly adhere to your official job descriptions. However, you should write to immigration because there is a good chance that the officials will appreciate the flexibility needed at this time.

6. Be compassionate with staff – Because the Cayman Islands imports roughly half of its labour force, your business will very likely have work permit holders, most which will be unable to leave the country and some of which you will need to lay off. Obviously, you should try all other measures before deploying the nuclear step of laying off staff permanently (whether local and permit holders). But if you must take this action, use a portion of the savings in salary expense to help them transition towards paying their rent temporarily, and being able to meet living expenses for a short period. Don’t look at compassion as a luxury you cannot afford right now. Think of it as investment into the long term viability of your business. If you cut any and all expenses rashly you may well survive the next 4 weeks. But when its time to rebuild your business you will very likely face challenges with the very same staff members that you cut with your survival short term mindset. Your limited support to them now in a time of need will be repaid later when it really matters to your business.

7. Be decisive – You will be faced with the need to make decisions on everything from alternate suppliers, to staffing, to negotiating with your landlord in cases where your business rents space. The most important thing is to think then act right away. These decisions may end up being imperfect but they will very likely end up saving your business.

8. Act like we are in unprecedented times (because we are) – All stakeholders that you deal with as a business owner will remind you of their ‘rights’ and your ‘contractual obligations’. Landlords will ‘demand’ their rent, staff will ‘demand’ their salary, officials will remind you to comply with the law. And all of their positions are legitimate. But things are not normal. You should not breach any of your obligations but you can and should discuss ways to adjust how you meet them with each party directly. For example, landlords might give you a 30 day extension on the rent, staff might be willing to sign an addendum to their contract to enable less hours or lower pay, and government departments may be willing to apply some flexibility on certain requirements.

Lots of small compromises, one big win
The truth is that all of these stakeholders have to negotiate with other parties as well. Your landlord may be currently discussing a delay on their mortgage payments for the property which you are renting, and employees may be in the middle of discussions with their health insurance provider or bank about similar flexibility. In totality, if each person gives a little, no one person or single entity should have to give too much and that approach to compromise will be the key to the overall survival of the business community.