The economic climate has certainly changed and the uncertainty on how long this pandemic will have made many smaller business owners worried about surviving. At this point, it is crucial to know your financial position, forecast its movement, and plan for any possible scenario. We might not be able to predict what exactly is to come, but we can most certainly prepare for it. At this time revenue will be low and payments are slow. How much will it cost you to stay open? How long can you sustain if you close? The goal here is to come up with a forecast for the most likely outcomes.
What are the financial moves that you can make?
Analyze your Profit and Loss statement. You need to have a clear idea of where you stand financially in your business. Forecasting will help you figure out the movement in your position and what you can do about it.
Reduce your costs. Now is the best time to analyze your expenses and identify necessity from luxury in your business.“Is that software needed for me to run my day to day business, and with decreased activity? If you want to cut down on expenses, you must stick to the essentials.
Review your debts and obligations. Inquiries on your capacity to settle your debts will be more frequent now. Identify your financial position. Don’t be afraid to reach out for possible renegotiation. Ask your bank for interest-only repayments or negotiate with your landlord for workable payment terms. Pay within your cash inflow. Also take advantage of any tax breaks the government is offering, even if you don’t need them right now, you don’t know how long this might last.
Find new sources of revenue and protect your cash flow. Adapting to the changes in the business economy is necessary to survive. I have written this article on how to find your new niche in this economy. It tells you how and where to pivot your business in this challenging time. As much as you want to focus on keeping your costs to a minimum, it is necessary to keep your cash flow, well, flowing. A balance of cash inflow and outflow is essential. Engage in new payment options. Ensure you are at the front of the line for all grants, subsidies and assistance the government may offer, and apply even if you don’t need it right now, you can always pay it back if you don’t use it.
Take care of your clients. More than ever, now is the time to build loyalty among your clients. Offer deals that work beneficially for both of you. Having loyal clients ensure future income for you.
Lastly, learn from other business owners and experts who have done it before. Learn from those who have been there before you: have conversations with players inside and outside your industry or read articles written by real, successful business owners. Mastermind groups offer insights into effective business practices that you can apply to your smaller business.
With all the economic uncertainty, the goal here is to understand your financial position and prepare your business for foreseeable outcomes. And you don’t have to face this challenge alone. Having grown our business 30% per year in the Global Financial Crisis we can show you how to make the best of a bad situation.