Everyone’s talking about COVID-19, but what’s really going on and what does that mean to the economy? As many of you know, approximately 16 million jobs have been lost, and thousands of businesses currently have gone out of business because they weren’t able to sustain themselves. On today’s show, Solomon Ali takes a closer look at the effects of the COVID-19 pandemic to businesses as well as to individuals personally, likening it to a tidal wave that’s overtaken us. He also discusses how business owners can make informed decisions and do business moving forward in a totally different way to keep their companies from going under.
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COVID-19 Strategies: Surviving The Tidal Wave
It’s exciting to be here again. I love you guys at MBA, especially my readers. Everyone’s talking about COVID-19. What does that mean to the economy and what’s going on? As many of you know, six million jobs have been lost and now the number is up to approximately sixteen million. Many economic leaders believe that number can go as high as approximately 25 million to 40 million. I don’t think we’ve ever seen that in our history, that many people being unemployed. That means thousands of businesses have gone out of business because they weren’t able to sustain themselves due to the loss of the customer base, such as small restaurants. When I say small restaurants, let’s think about the little restaurants in the little strip malls, things of that nature.
The little boutique and retail clothing stores or that guy that might be polishing your shoes or fixing and repairing your shoes. Those types of businesses are going to probably no longer exist in your local strip malls. That’s going to be interesting to see how that all plays out. We already hear that a lot of the government is trying to do what it possibly can. I for one think Trump is being placed in a real tough position. Personally, a lot of us like to play Monday night quarterbacking and judge what a person’s performance has been and say what we would have done and things of that nature. A lot of times, it’s hard to do that. It’s like watching a basketball game or a football game and say, “The quarterback should have thrown downfield or done this or done that.”
You can say that after you were watching the game, but when you’re in it, it’s a whole different ball game. Pretty much that’s probably the way it feels for President Trump as well. He’s doing the best job with the awareness and the knowledge that he has at the time. He’s doing the job that if whoever was president, even if it’s my President Obama, it will be a difficult and very challenging job to be doing right now with the affairs facing the country. I want everybody to keep that in mind. We had a press release asking all of the spiritual leaders to pray for President Trump. I’m not going to make this a religious thing.
By no means, don’t get turned off by that. I do love God with all my heart, all my soul and all my mind. Nevertheless, we should pray for our leaders. We should pray for President Trump and because God said he’s the one that appoints leaders and things of that nature and the man has a tough job and none of us would want to be in his position right now trying to do that job. Me for one are applauding for doing a job that I would not want to do, being in a position that I personally would not want to be in, trying to make decisions. Every time you make a decision, everybody criticizes the decisions that you’re making. That’s incredible.
We all know how that feels. Sometimes especially the people who are on social media and things of that nature, you think you’ve said something witty and clever. All of a sudden, you get blown out by somebody else that has a totally different viewpoint that sounds a little bit better because they had the opportunity to critique yours and criticize yours and think about what they were going to say. All that being said, thousands and thousands of jobs are being lost. Millions of jobs have already been lost. We’re losing thousands of jobs every single day. Tens of thousands of businesses are projected to be closing down and will no longer exist. That to me is totally mind-boggling. I don’t know what’s going to happen. I don’t think no one knows what’s going to happen because no one’s ever seen this.
What we’ve all seen and read about were little things in history, but history has never told us something about this. A lot of people want to compare it to Spanish Influenza back in 1918. I don’t think it’s quite the same. Here’s why I say that. One, you didn’t have as many people traveling. It was somewhat already isolated because people were not traveling as much and confined to their various regions. When I’m saying regions, I’m going to say regions whether or not you lived in New York, you didn’t go to California. If you lived in California, you weren’t going to Minnesota. People weren’t doing a lot of traveling as they do. We live in a totally global society. What we do here in the United States affects everyone across the world.
It’s global. We are the largest economy. You got to wrap your mind around that. We are the largest economy, approximately a $23 trillion economy. Keeping that in mind, minorities, especially people of color, being black, they make up approximately 5% to 7% of that GDP. That means we’re spending a great deal of money. We are the largest consumers in the United States. However, that being said, we’re also the worst savers in America. Everyone else is saving their money and investing their money. We’re spending our money on cars, clothes, hair products, things of that nature. We are the largest consumers. We keep Walmart going. We keep various companies going and in business. When you start putting all of this in perspective, what am I saying?
I’m saying we need to be very mindful of what it is that we’re doing, who we’re spending our dollars with, and do they follow the same beliefs that we do. As one who has started a private equity company with as little as $200 and by the end of a year with loaning out over $3 million. Don’t quote me on it, but I’m pretty sure it was about $3.5 million. At the end of the year, that’s what we were loaning out to other companies. I have a pretty good grasp as one that also runs one of the largest minority energy companies in the United States in NDR Energy Group. My partner is Universal Bioenergy and I’m CEO there of both companies. Our sales have been as high as $78 million with profits coming in as roughly $4 million.COVID-19 is basically getting rid of all the businesses that are weak in our economic system. Click To Tweet
When I tell you these things that I’m going to tell you, I’ve got a pretty good grasp on it. I’m not afraid to show no tax returns that have been filed. That’s legitimate. We don’t play any games. Also, we were on one of the largest technologies or we hold IP, Intellectual Property, for pretty much smart security and smart homes. We covered the gamut. Our company is our exclusive licensee and we were very strategic in this and developing intellectual property. I did not develop it. The previous CEO developed it, came up with it, and did an awesome job. We had to have the foresight in the strategic planning to be able to take it further. That’s what a lot of businesses are going to be facing.
Effects Of COVID-19
They’re going to need money. That’s why I’m talking to you. What is COVID-19 doing? Let’s ask. Let’s follow the steps. First, COVID-19 got us all shut in. We basically had to stay home, couldn’t go work and things of that nature. What was the effect of that? I couldn’t go to work. People that I work with couldn’t go to work. Therefore, also customers couldn’t go to visit and patronize the places that they normally patronize. That was the beginning effects. That took us away from our customers, the customers away from the business. Businesses immediately start feeling the impact, especially small companies. The government says, “We’re going to give you a lot of money or give you some money to help tide you over.” Whether that’s to $1,200 or some type of loan or covering your payroll 100%, how is that going to help me or you if all your customers are still locked in homes and can’t come out and visit?
Right now, we have something that’s mind-boggling and doesn’t make sense. Because I might be able to pay my people, but now I’m still running up a bill and obligations through my business and I don’t have enough customers. At some point, the fat lady’s going to sing. When she sings, I’m not going to have any money, and that’s what people have to be thinking about. That’s the part that’s so mind-boggling. What we’ve said, COVID-19, what has it done? It has caused pretty much all Americans to be locked at home where we couldn’t go to our local stores and things of that nature.
Although they have given us privileges to go to the grocery store from time to time and take care of things that what they would consider essential, that’s great. Let’s look at it. These businesses are going to need money. If the government is having the same problems that we’re having, everyone at the government can’t be essential employees. They’re having the same problems we’re having. They’re going to be behind in their workload and getting all of this done. Let’s think about a tidal wave. Imagine a tidal wave overtaking you. That’s what happened to our government. A tidal wave has overtaken the government, so now they’re going to have to clean up the mess and the debris and get everything back in order before they can handle business as normal. They have to develop some systems that weren’t developed and in place prior to.
A lot of people I know got these great and wonderful ideas. However, stop playing Monday night quarterback, and let’s look at it for what it is. You don’t know what to do because you are not in the position of leadership and you don’t have all the facts. What you have is what the news is sharing with you based on what their limited resources have been able to allow them to research. I’m not saying they don’t have a lot of money to do a lot of thorough research. What I’m saying is everyone has a budget. They’re not going to throw millions and millions of dollars to do some research. They’re going to do like everyone else. They have a budget. They’re going to try to budget and find out the most factual information for their American people or what they think their audience wants to know.
That’s what they’re doing. That’s why I say limited resources because they’re going to work within a budget. Nobody’s going to blow a whole budget just on one thing because you still have to do what? Run a business. They have to be there to report the news tomorrow, the next day, next month, next year. These things you have to keep in mind. They’re trying to give you the best information that they possibly can so that you can make informed decisions. If you’re in business, if you’re a small business owner, what you want to do is begin immediately looking at all of the customers that owe you money and you want to start trying to collect as much of that money as possible immediately. You want to then start negotiating with all your vendors right away. Negotiate with your vendors and try to get the prices down and try to work out some other type of arrangements.
Whether that’s money placed on the backend, whatever the case may be or whether that’s a significant desk count and remind them of the state of emergency that we’re all in that if you go under, you won’t be able to pay the bill anyway, so you need them to work with you. Most of them are in the same situation and they may be more apt to work with you. First thing, call and contact all your customers and start collecting all your money. If a person owes me $100 right now, I’ll take $70 or maybe $80, $85, but you get the point. Get what you can get because cash in hand will be king. Because of your survival, your business is at stake here. Call the vendors. If I owe a vendor $200, I may ask that vendor to sit back and give me a price reduction and pay him $150 and try to get him to accept that.
That’s going to be your strategy right there. The next thing is it’s also a time to take full advantage of market share. Go get you some new customers. You might be saying to yourself, “Everyone’s locked in, how do I do that?” You’ve got to start utilizing artificial intelligence. You’ve got to start utilizing technology and you’ve got to be more creative than your competition out there because you better believe if your competition is talking to a guy like me, we’re about to get real creative on you and we’re going to turn around and get your customers and everybody else’s customer. When this thing opened up, we’re doing this business a whole new way.
Doing Business Differently
I’m trying to not narrow it down to any business in particular or industry in particular. I’m trying to speak in general so that everyone will be able to get it. Don’t call me or ask me and say, “I’m in the restaurant business.” If you’re in the restaurant business and you’re in a strip mall or something of that nature, you are screwed and it is going to be tough. Your best plan is going to be to work out one of those kitchens and hire people that are in there and make sure your model is going to be delivery. That’s it. It’s going be a delivery type of business and set up, and you better have an excellent product that you’re going to be delivering. Every other business, you’re going to be okay. We’re going to lose thousands and thousands of industries right across the board because we’re going to be doing business moving forward in a totally different way.
All businesses are going to have to try to get new customers. You’re going to have to look at your industry in a whole new way. What do I mean by that? You’re going to have to figure out how technology, artificial intelligence, the internet could actually help your business could streamline. You’re going to have to cut some of your human capital. If you haven’t already done it, I’m sorry to tell you, you’re going to have to cut your human capital. It’s very unfortunate. You may be able to use them as contractors on jobs from here to there from time to time. However, you will have to cut it down to the bare minimum. You may have to turn around as a small business owner and do a majority of the work yourself.
This is why it’s important to understand and to know your industry, to know what is going on in your industry, and understand what is your competition? What are they doing? Get ahead of them. Figure out, go visit them. In the old days, we used to go shop our competition to try to understand what are they doing? How are they adjusting their prices? You want to do the same thing. Go visit some restaurants, take the time, visit some restaurants. You want to take your time, visit your competitors in your industry. If it’s a retail industry such as a boutique, if it’s a manufacturing or whatever it is, you want to understand what everyone else is doing.
Rather than assembling everything in a warehouse, you may have to do piece work where people can assemble certain parts at home where you ship it out to them and then they assemble those pieces and then ship it over to the next person to assemble the next piece and things of that nature. The final destination will be quality control where you can go ahead and overview and then send it out to the customer. You’re going to have to get creative, even if you’re manufacturing, “How do I do this?” What would be the advantage of doing piece work and having people work from home if you can get that done, would be what? You just cut a huge bunch of your labor costs because now you have all these pieces work. Piece work is people making so much money for doing a particular project. They might put some widgets together and they make so much money, they’re considered like a subcontractor or whatever. You may have hundreds of them across the country. You actually might find out they may work better.
Another thing is bank loans are going to get extremely hard. We all know to get bank loans, you need historical numbers. To come to a private equity company, to come to a VC, you’re going to have to be able to sell us on your dream and your vision. I know a lot of you think what you have is the best thing since sliced bread, since air. It’s not. You may have a newer version of that or you may have a different span on it, but at the end of the day, there is nothing new under the sun. What we’re going to be looking at is, is it sellable? Is it marketable? How much market share we can get? Over what time period will we be able to accumulate that market share? What’s going to be my return on investment? What’s my return on capital? We’re looking at those things. A lot of you can’t get money because you don’t understand what the money is looking for to extend your money.
We’re looking for our money to be safe and secure, which means at some point, you’re going to have to put something up. It’s not good enough to sit up and tell us that you got this great dream and it’s going to make billions and billions of dollars. Everyone thinks their job is going to make them all of this money or their company. It’s going to make them all of this money. If that was the case, everyone would be doing it. It’s not that easy. It is the most difficult thing on the planet trying to run a business, develop a business, manage employees, scale a business, and things of that nature. COVID-19, what has it done? It’s getting rid of all the businesses that are weak in our economic system. Businesses are going to begin to suffer when the banks start having their capital requirements from the federal government go up. They’re going to have to start closing and canceling on loans. They’re going to have to start cutting credit lines and things of that nature. That’s what’s coming next.
How It Affects You Personally
Credit lines will be getting cut. As these credit lines and everything are getting cut, the businesses will be affected by that. COVID-19, what everyone has to keep in mind is how does it affect you personally? If you’re a business owner, how does it affect you personally? If I’m talking about some people or talking to some people who want to start a business and become entrepreneurs, this may be one of the best times in history to become an entrepreneur and get going and start your business. There’s going to be a few little secrets in doing that. I will not try to start a business from scratch. Do not try to start a business from scratch. Put that out your mind. Think about purchasing a business that’s in the industry you want to be in. You may be able to pick it up for pennies on the dollar. It’s very important.
Business owners, let me get back to you. Your business is struggling. You have a loss of capital, revenues, everything down. You’ve got to get rid of the employees. You’re going to have to cut your employees. When the bank starts cutting the credit lines and things of that nature, hopefully, you have already cut your employees. If you’re going to want to be able to access capital if I am you, here’s what I’m doing. I’m getting rid of as many employees as possible, unfortunately. I hate to be saying that because everybody needs a job. I have family and friends around the country that need their jobs, that work for other people. If I’m the employer, I’m getting rid of as many people that are non-essential employees within my organization as possible. I have to save as much cash to keep the business going.
The next thing, owners, you’re going to have to roll up your sleeves. You’re going to have to roll him up. You might even have to roll up your pants legs. You’re going to have to get deep into it and doing a lot of the work as much as you can for 15, 16 hours a day, maybe even 17, 18 hours a day, seven days a week to make your business survive and to keep it going. Nobody wants to hear this. Especially some of you business owners who have been riding high on the hog, accustomed to telling other people what to do and collecting the money and paying everybody and think you’re doing a wonderful job. It’s time. Roll up your sleeves. Roll your pants’ legs up. Do the work for 17, 18 hours a day, seven days a week, keep going. Don’t stop, keep going. It’s going to be very critical and you will appreciate that advice later because you will be hopefully one of the ones that end up on the other end after doing that.
The other thing, you’re going to have to automate your business. Automation is going to look like this. You might have to buy licensing programs. That’s what I would be doing, buying licensing programs to make my business more efficient so that I can make more productivity, create a better product faster and everything of that nature without the human capital. You’re going to have to have buy equipment, might even have to buy a robot or two. A robot or to be a whole lot easier to possibly finance because now it’s a piece of equipment that you can finance. It also will have some depreciation to go with it, but that robot may be able to replace 6, 7 people that were currently working for you. This means you’ve got rid of comp issues, tax issues, payroll and lost work productions.
You lower risk management and your quality control. You’re getting a better-quality product and you’re getting more efficiency. More importantly, that is something that is financeable that you would be able to go to a bank or to a guy like myself and say, “I need to borrow a few dollars.” I say, “Why?” “I’m buying this piece of equipment. I’m getting rid of fifteen employees and I’m buying this one robot. I’m going to buy this licensing program and it will do the work of the fifteen people.” That’s keeping it real. That’s where we are going. That will help you to survive. If you are a small business or a mid-sized business that is pretty well-capitalized and have been well-capitalized because you believe in saving and investing money, you might want to look at doing some roll-ups.
That’s what I’m looking at, looking at various industries to roll up, to buy a lot of these companies that are going to be struggling and trying to give them the capital that they are going to need and partnering with them to buy them the time until the industry or that market possibly come back. I was talking to a guy and he was like, “Travel is going to come back.” I said, “It will but it will look different.” Because if I’m in the travel business, I don’t think I’m going to need a whole bunch of people at a front desk checking my plane ticket. No, we can do all that online. In fact, if I owned a plane, I may turn around and get me a couple of robots to go up and down the aisles and take my orders and everything like that and serve the people drinks and things like that.It's better to own 50% of something than 100% of nothing. Click To Tweet
Everybody’s going to have to get more efficient. It’s going to be a new way of doing business all the way around. The person is more creative and thinking along those lines is going to be the person or the company that’s going to excel in these times. Other things like me. I’m a simple guy. There’s nothing complicated about me. I’m going to look for 5, 6 businesses to buy in various industries and then I’m going to turn around and do what I possibly can to leverage my financials the best it can and whatever little cash I may have. I have to break into my piggy bank and say, “I’ve got a few more pennies here and I can help this business go for the next two years. We can, along the way, buy 10 or 15 more businesses that are in the same business, same industry. That’s a roll-up. Start rolling up some things.
Maybe you partner with your brother, you partner with your college buddies, your neighbors down the street. You could create an investment club and you sit back and say, “What is it that this community that I live in may need?” You determine that and you partner with the people and you guys all break open your piggy banks. Break them open, put your money together and pool it together, then go ahead and buy these businesses, and help save these businesses. You got to be very selective. You can’t be foolish because a lot of businesses, they will no longer exist. A lot of industries will no longer exist. COVID-19 is going to affect the banking because the government is going to have to come back down and tell the banks, “You’re going to have to get your cash reserves and everything up.” That’s it.
When that happens, in spite of what everybody’s talking about right now, that’s a crack. They’re giving you a little bit of information at a time, allowing you a chance and an opportunity to digest what’s going on and happening. It’s about to get a whole lot worse because you’re going to have millions and millions of people out of jobs. You’re going to have thousands and thousands of companies that no longer exist. Where is everybody going to go? How are you going to feed your kids? What are you going to do? That’s how COVID-19, in a very short period of time, has affected our economy. Not just our economy, but the whole global economy. Everyone’s looking at America saying, “What are they going to do? We need them to pull through.”
No Time For Name Game
We need them to come through. Why do they need us to come through? Because their economy is dependent on our economy. They need us not to fail, but to get this right. That’s why I say we need to be praying for our President Donald Trump. This is no time to be doing the name game. This is no time to be pointing fingers. This is a time to pull together, to join forces, to join resources, to show what America’s all about. Stop blaming the president. Stop blaming all the congress. It’s not their fault. We are where we are. It’s among us. It is what it is. Grit your teeth, pull up your sleeves, and take your butt to work. That’s the American spirit. Go to freaking work. Start doing what you can do. Look around. How can I help my neighbor do something?
How can I help the business owner down the street that’s struggling? “I know you can’t pay me, Joe, but don’t worry about it. Let me help you out because I know you’re struggling.” My neighbor may be elderly, sick, whatever the case may be. Let me go over and cut his lawn for him. Figure out what you can do right now for someone else. Take your eyes off for your own personal problems, your own personal struggles, and do that which you would want someone to do for you. Go help someone else at this time and I promise you that will come back to you. Everyone’s trying to do what they trying to do and trying to be a benefit and help. My solution is simple. Streamline everything that you possibly can. Increase your customer base, be very creative on how you move forward in doing business, and get a better knowledge and understanding of how technology will affect the days to come. That’s extremely important. Start looking at your industry and the consumers in your industry. What are their buying trends? What are they looking for? What are they wanting? Start gearing your business that way.
COVID-19, for a lot of you, I’m sorry. It’s going to put you out of business. For a lot of you, I’m sorry, you have my deepest sympathy. You’re going to be unemployed for a long time before you’re able to find a job. It’s going to be tough. It’s going to be hard. I’ve been there. I’ve been where I had no revenue coming in where I had no money. I’ve been there where I had to stay with family and friends. You will make it through. You will have to save every dime you have. If you can move back in with family to save your resources. For those of you might own homes, rent them out. Move in with families or friends. Consolidate your resources that they may stretch further. Something as simple as moving in with mom and dad again, and helping mom and dad a little bit and renting your place out, give you an opportunity to double up on a mortgage. Something that simple. You may only have to do it for a couple of years and think of how much you will be able to pay down on your principal.
Nobody wants to go home and move back in with mom and dad or move in with a sibling, but these are special times. This is history that is being made and how you respond and what you do right now will tell the story of whether or not you’re going to survive and how you would survive. Help your neighbors. Look at everything that’s going on. Other business owners, if there’s another guy in the same business that I’m in, maybe we partner together. He handles sales and I handle administration. We do work together. Our businesses will survive. It’s better to own 50% than 100% of nothing. That’s a new reality. You’ve got to get that in your head. It is better to own something than nothing at all. That’s what COVID-19 is bringing us back.The strong people are going to survive, and the weak people are going to struggle a lot longer than they intended. Click To Tweet
Strong businesses will survive. The strong people who are willing to make the sacrifices and do the things that are necessary will survive. The weak people that are full of pride or whatever you may want to call it or, “No, I’m not moving in with mom and dad or my brother,” you’re probably not going to survive. You’re probably going to struggle a lot longer than you intended. Let me tell you, you are not all that. I’m being honest with you. None of us are. We need each other. More than ever, we need each other to make this work. Your business is not all that. You need a business partner that has the financial wherewithal to carry you through these lean times. You may have to partner with people that you wouldn’t have ever thought of partnering with to help carry and consolidate you through these lean times. I’m sorry that we’re all going through this. I wish each and every one of you, from the bottom of my heart, the best. Let’s do like all Americans should be doing. Let’s pray for one another and let’s help one another out. We will all pray that this passes soon. I thank you for paying attention to what I have to say. Good luck. Stay safe.