As we continue to adapt, as individuals, to the changing mandates to control the spread of COVID-19, small businesses have to be prepared to make quicker and bolder changes. Crisis management mode is the new normal and will be for months to come.
Mask and gloves on! Use these primary steps to assess the trauma and keep your vital cash flow up.
1. Forecast your expenses
With revenues slowing down or expected to decrease, it is more important than ever to be clear on your expenses. The first thing to do is to look at what they are going to look like for the next 6 months. You can use a simple spreadsheet listing your payroll, your fixed expenses like your rent and insurance, your variable expenses such as materials and other production supplies, and your liabilities i.e. loans, accounts payable, etc.
Having an obvious picture will answer many questions.
2. Cut down your cash outlay
When sales are growing and cash abounds, being careful about spending is not as crucial as in time of crisis. There is always an opportunity to tweak your operation to maximize every dollar: cut anything that you don’t have a contract for, renegotiate your material costs, implement a referral program to lower your marketing expenses, move to digital documentation and presentation instead of paper ones, etc.
3. Source as much capital as you can
Right now, nobody has a reliable prediction on how long or how deep this slowdown is going to go. If, like us, you have survived 9/11 and the 2007/2009 recession, you know that cash will be your most valuable asset. Building a reserve of cash or secure an access to capital should be your most pressing concern. The barriers to funding are an all-time low. The SBA offers low interest loans directly funded by the Treasury. It is based on expenses, so make sure to prepare your forecast as mentioned above.
You can apply for the Paycheck Protection Program loan through an approved lender. If utilized following the guidelines, you can request a loan forgiveness.
Major corporations have pulled millions of dollars to support small businesses.
It may feel a bit daunting at first, but you’ll feel relieved having better control over your cash. We have waived all of our initial consultation fees to assist CEO navigate this economic uncertainty. Reach out to our funding executives to get started.