Small businesses across the nation are experiencing economic disruptions due to COVID-19. This is an uncertain time with many unknowns; however, we want to provide guidance to businesses that have experienced hardships and shifts in their businesses. If additional support is needed, an accountant or financial advisor can help strategize and come up with the plan that fits your business the best.
With an unsteady flow of revenue, it is crucial to properly manage your finances. Taking steps to keep up with your company’s expenses during this time is extremely important. This includes examining your budget and analyzing how to prioritize your spending. Some measures you can take to manage your cash flow, are budgeting for the upcoming 30 days/60 days, reducing overhead expenses, eliminating unnecessary items, modifying your business hours as needed, possibly negotiate with the landlord for concessions, and if necessary, cut back on staffing/payroll. It may be useful to find alternative sources of revenue and re-allocate resources to those areas of growth. To relieve some economic burden, the U.S. Small Business Administration did offer some low-interest loans (PPP, EIDL). If you do take out a loan, carefully review your loan documents and communicate with your lenders of any potential challenges.
Times are scary, but it is necessary to take action and see exactly where your company stands. An accountant can help to evaluate your company’s net worth. It is important to keep up with debt and fixed expenses during this time. To optimize your expenses, converting fixed to variable costs when possible can reduce your spending. An advisor can help with tough decisions on cutting costs that are not promoting revenue or business. Have your accountant create a series of financial reports to get a better outlook and prioritize your company’s spending and bills. If you do not have any money coming in currently, some accountants will incorporate future income to help to take the edge off. They will even help strategize on how to offer discounts to your customers who pay their invoices early to get the funds in your bank account faster. By seeking professional financial advice, you can gain a strategic budget and plan that lays out all available options for your company.
Communication is critical at this time. Inform customers about the status of your operations, proactive safety measures you’ve implemented, and your ability to provide your service. Assure them about the cleanliness and training of your staff. It will help if you focus on keeping up with other aspects of your business like your website, social media accounts, and email marketing during this time to promote your business for future endeavors and keep money rolling in.
It is also critical to consistently communicate with management and your employees about your plans and any changes. Make sure to prioritize the health and safety of your staff and customers by training workers to be hyper-alert about cleaning and wellness. You may need to develop other ways to communicate with your staff such as Zoom, Microsoft Teams, and other messenger platforms.
As for your supply chain, prepare for any limitations and delays. Ensure you have sufficient inventory and find other suppliers if needed. You can try to negotiate payment terms and discounts for quick payments with your suppliers.
Times are hard right now for small businesses, but this won’t last forever. Be open to adapting your business model to fit the current conditions. You can offer promotions to encourage customers, conduct more online/ contact-less business (takeout, online shopping, Zoom, etc.), invest in technology to keep customers engaged, and much more. Take the crucial step and find out what is best for your company. Feel free to contact us at The HOPE Accounting Firm with any questions. We can be reached at contact@hopeaccountingfirm.com