The COVID-19 outbreak has triggered a massive global response that has changed the patterns of everyday life. With many governments rolling out more austere public health measures such as social distancing and bans on non-essential travel, businesses are taking a significant hit, with small businesses worse for wear.
In these uncertain times, small business owners need to take the necessary steps to safeguard business operations. Enacting the right strategies can spell the difference between staying afloat and shutting down for good in the face of this public health crisis
- Monitor your cash flow
Cash flow is made up of a business’s payables (wages and operation costs) and receivables (billings and payments). Due to limitations on non-essential travel, it may no longer be possible to collect on some receivables. Meanwhile, payables for your team and your business continue to pile up.
Carefully monitor your cash flow and try improving it through methods like negotiating payment deferrals with suppliers and giving prompt payment discounts to customers.
Both your suppliers and clients have also been affected by the crisis, so it is crucial to work with their concerns in mind along with your own. This not only gives your business enough liquidity to stay operational but also helps the parties that are necessary for your business.
- Update your financial statements
In line with monitoring your cash flow, keeping your financial records up-to-date is a must in these times. Being aware of your financial capabilities will help you make more informed choices that keep your business afloat.
Take note of vital functions that can be negatively affected by public health measures, such as sales, supply chain, staff availability, liquidity, and so on. Keep your ear to the ground and seek out information from your customer base, suppliers, and the situation at large. From there, you can create daily financial forecasts to guide your operation plans better.
- Re-examine your budgets
Cash reserves will undoubtedly lower or fluctuate as quarantines and travel restrictions are enacted. Your budget will need to address essential expenses sufficiently or you face the risk of trouble for your operations.
Create a detailed breakdown of your overall spending and pay attention to areas where you can cut down and move the amount into something of higher priority. This will require you to make more austere assumptions, like a considerable decline in sales or a lack of supply due to travel bans.
Shuttering storefronts, stopping ads, and maintaining a skeletal team are just some ways to reallocate the budget. Aside from this, you can consider reducing work hours and pay to stabilize your cash flow.
- Be on the lookout for fees, taxes, and rent waive and extensions
Public and private institutions are enacting efforts to ease financial burdens from citizens and businesses.
Mandatory fees and taxes like business tax and rent are being waived, and payment deadlines are being extended in light of the current situation. Meanwhile, private service providers for internet connections, phone lines, and utilities are offering extensions and discounts to their subscribers.
To maximize your budget, it is crucial to stay on top of official news and announcements from your local government, banks, and service providers. After confirming these waives and extensions, pay close attention to the specific terms and conditions of the offers. This will give you a clearer understanding of your financial situation, making it easier to plan.
- Consider or improve efforts on digital platforms
With limited forms of traveling allowed, your business can suffer from the lack of storefront traffic. This is the perfect opportunity to consider marketing and selling online, if not doubling up on your current efforts.
In making this shift, take time to look at your business model and see how it can be best adapted to digital platforms. This includes how you can deliver your products and services, as well as market them to your target audience. If needed, you can find an outsourcing partner to address any gaps in your staff for essential services like customer support.
Once these details have been settled, make sure to update your e-commerce portals and platforms and provide logistical solutions to deliver your products to your customers.
- Explore alternative financial options
Both the government and private institutions are working towards offering financial solutions to businesses, especially ones that address small business challenges. Taking advantage of these options may help stretch out your budget and address any immediate business needs.
Pay attention to any government announcements on these financial solutions and fulfill all the requirements to receive them. You may also want to consider filing for business loans to improve your cash flow better.
If you have any existing loans, get in touch with your lender to negotiate for extended credit lines or deferring payment to increase your cash on hand. If your lender agrees to the new terms, keep a record to ensure accountability even after the crisis.
While this pandemic may seem like an insurmountable challenge for small businesses, the key to overcoming it is to maintain your financial health and make the right decisions to keep the cash flowing. Most importantly, knowing is half the battle. Keeping up with the latest information can help you adjust your strategies and maximize your resources when you need them most.
About the Author
Chris is a Content Writer at Globe Go! and myBusiness Academy and a contributing writer to various business and finance blogs. He is into running and challenges people at the park to stare down contests in his free time.