The COVID-19 is rapidly increasing the number of patients worldwide, and its impacts have crushed the global economy. No doubt, it will take us a lot of time to recover from the consequences – months or maybe years. Thus, being a small business owner, you need to find which actions you can take to stabilize the financial situation of your company, and the time is now. Although you might want your employees to be safe and healthy amid this pandemic, taking care of your business health might also be your priority.
Many tech giants have allowed their staff to work remotely to promote and adequately practice social distancing while attempting to contain the deadly virus. However, not all businesses are capable of doing this and are facing multiple financial risks in the form of supply chain disruption, diminished productivity, or lost business.
According to PwC’s COVID-19 CFO Pulse Survey, finance leaders across the U.S and Mexico said operational outcomes, liquidity, financial future, and capital resources are among their top concerns.
If you are also worried about the impacts of COVID-19 that can damage your business’s financial future, read further to know how you can take control and make things better.
Know how to keep your business’s finances on the track
- Smart Budget
As business financial Introduction to Lean Management is all about keeping the finances on track; Smart budgeting includes multiple things;
- Create a budget and strictly follow it:
Budgets make expense tracking easier; creating a budget will help you keep track of your money, for example, where your money is spent and whether you’re spending a lot or not enough on essential business operations.
- Spend only when needed:
You would make several investments from time to time but avoid doing all at once. Find out when you need to spend, unplanned expenditure can damage your financial condition.
- Always keep some cash reserved:
Having enough cash in your business accounts will help you at times of unexpected expenses. At such times, you would not need to take a business loan and be able to manage the costs easily.
- Supply chain stability
You don’t want to tell your customers that their favorite product is out of stock. You need to manage your inventory correctly, for which you can focus more on stabilizing the supply chain by pre-booking order with suppliers.
You can look into your sales records and find which items are sold quickly, which are in high demand, how much inventory left, etc., and use such data to decide how much supply you require by when.
For any business to deal with any crisis, it is vital to have enough cash. For instance, if you become unable to pay your suppliers or staff, relations go at risk. Due to that, you might have to cut costs (where possible) temporarily in order to save some money by the time government providers some help in paying staff salaries.
You can also cut costs by outsourcing your back-office operations that don’t generate revenue, for example, acquiring third-party bookkeeping services; in this period when resource shortage is at a peak, such services can save you and keep your books organized and updated accurately, helping you with financial planning too by providing you financial data on time.
- Customer centricity
Since customers are all you need for income, it is vital to put much effort to engage them with your business. Reassure them that you are doing your best for their and your staff’s safety. Besides, you may offer some off on products and special offers to attract more customers.
This will balance your profit as the sales will increase, and it is better to have some-income than no-income during this lockdown. You can also consider and target market segments other than your niche and grab revenue opportunities.
- Work remotely
Operational disruption amid lockdown might already have caused you financial loss, but to tackle this issue, remote working is a highly considerable solution. Allowing your staff to work from home can be a better way to deal with the effects of this pandemic on your operations while maintaining social distance.
Well, you might need to invest a little in technology, for example, subscribing to the services of virtual meeting platforms, cybersecurity measures, etc., but each dollar spent would result in uninterrupted business operations. The ‘work from home’ concept is most effectively helpful for service-based businesses.
- Think smart, go smart
Customers are unable to walk into your premises due to safety concerns, and to avoid the spread of the virus, there’s no time to wait for things to get back to normal. Seek opportunities; businesses around the globe are switching their business.
Brick and mortar retailers are taking orders online and hiring people to deliver the same to customers. Textile mills have started making masks, educational institutes have started providing online classes, and liquor producers are switching to sanitizers. You can also consider changing your business model if possible.
- Monitor Your Books
Though you might already have an accountant, it is essential that you yourself also monitor how much money comes into your business from whom and how much goes out to whom. Monitor your regularly to manage accounts receivable efficiently – an excellent method to keep your financial situation steady.
Besides, regular monitoring helps you find numbering error/red flags that you can address and prevent them from occurring in the future. If you think you are unable to handle all this solely, it is advised to consider bookkeeping outsourcing services. Though you will still need to monitor your books, they can make the entire process a lot easier and manageable for you.
- Keep your suppliers and lenders informed
Knowing your financial situation and analyzing bookkeeping-data also help in forecasting. If you know that it will be difficult for you to pay off your loans and make supplier payments, inform them as soon as you can and keep them in the loop.
This is going to be tough, but it is essential as currently, they are also in the same boat. Many companies are waiving late payment fees, allowing their clients to pay later, even offering free services to coronavirus-hit businesses.
- Maintain positive cash flow
Cash is as vital for your company’s survival as oxygen for the human body to live; it comes in and goes out. You can run your business with steady cash inflow, which should most times be more than outflow. It is essential to maintain a positive cash flow to always remain in profit.
In these hard times, you can encourage customers to pay online for receiving payments easily and quickly. If possible, you may also give a small cash-back to customers paying in advance. Consistent positive cash flow is the key to get through the financial crisis, which emerged due to the consequences of COVID-19.
The points described above would be useful, though some might be tough to follow, while some can easily be implemented. Among all, two things are trending around the world amid the current emergency; one – remote working, two – outsourcing. You may research on both and find which one best suits your requirements and financial situation to tackle the effects of coronavirus.
Author Bio –Stacey Howard has 6 years of experience in accounting & bookkeeping. She has been working as an accountant with reputable firm Cogneesol– accounting and bookkeeping service provider. Due to her passion, she has contributed significantly through her write-ups about multiple accounting industries. You can reach Stacey at LinkedIn.