8 Strategies for Getting the Most out of your PPP Funds
The Paycheck Protection Program (PPP) is one of the most aggressive government support packages for small and mid-sized business that we’ve ever seen. These funds, which are designed to enable companies to maintain their workforce and assist with rent, mortgage interest, or utilities during the Covid-19 crisis, may provide a cash cushion to support other business advantages as well.
We’ve summarized the ideas we collected to help more manufacturers continue on their path to Stage 4: Thrive. The 8 high-level business strategies include:
- Improve Health and Safety Policies
- Enhance Automation and Machine Technology
- Improve IT Value
- Hiring and Employee Benefits
- Enhance Sales and Marketing
- Smooth out Production Schedules
- Save on Capital Purchases
- Increase Cash Reserves
1: Improve Health and Safety Policies
Some people mentioned flexibility around policies for health and safety. For example, with a reasonable cash cushion, it may be possible able to lower the number of employees onsite at one time or create new policies on closing during an outbreak. One leader said, “The PPP funds cushion allowed us to immediately change our policy to completely shut down for two weeks if anyone got infected – regardless of which team they were on…softening the policy like that seemed to really calm people.”
2: Enhance Automation and Machine Technology
Other respondents are leveraging PPP to improve their machine technology and/or increase automation in their facility.
For example, one respondent said: “We are also currently investing in a prototype for our next generation machines (which will be universal and connected). Once we have the prototype, we’ll need cash to purchase several machines. A giant step toward a smart factory – the factory dreams are made of! I believe the new machines will help with our future and protect us from a downturn because we will be able to produce more with higher accuracy and less effort.”
3: Improve IT Value
This is a great opportunity to leverage downtime to deploy and train on new IT systems and software, or to improve the way you use the systems you already have. Respondents commented on the following process improvements: moving to more paperless processes, creating a new client portal into the ERP system, using videoconferencing more consistently and to better effect, and improving file collaboration capabilities.
All these changes will drive efficiencies both now and into the future.
4: Hiring and Employee Benefits
Employees are the driving force behind business and it is imperative to keep them happy, healthy, and productive. Some respondents are providing raises with the PPP, or at least communicating effectively to show stability and support for their teams.
We also heard from people who are using this as an opportunity to hire new talent. In good times, hiring can be extremely challenging so several leaders are filling positions now, benefitting from other company’s layoffs.
5: Enhance Sales and Marketing
Improving or increasing your focus on sales and marketing can make good sense right now to grab market share while others are cutting back on external communication. One respondent said “…we have doubled our sales, marketing, and advertising budgets to try to get as many new customers as possible in this downturn.”
6: Smooth out Production Schedules
Some manufacturers are finding that customer projects are getting pushed into Q3. If you halt those projects now, it can affect your ability to achieve success and customer satisfaction in the future. Using the PPP to maintain production during the lull may be a great forward-thinking plan for your business. One manufacturing leader explained, “We have had a significant amount of orders pushed from Q2 into Q3 and our demand for Q3 is now extremely high – more than our capacity. We are planning to work on the product in Q2, even though the revenue will lag.”
7: Save on Capital Purchases
A slower economy may mean you can get a great deal on capital goods. One respondent was planning for this “we will approach the suppliers of these goods and ask them what sort of incentive they can offer for us to purchase those goods now instead of later.”
8: Increase Cash Reserves
Finally, while many of the leaders who responded to our survey had some grand ideas for using leveraging the PPP funds, every respondent realized the precarious situation our businesses are in. They spoke of their concerns about customers pushing out projects or stopping payments, or even their own potential need to close their doors for safety. So, while many of the plans above are great, every respondent spoke of the need to reserve cash in case of unforeseen expenses.