These are challenging times. New information is coming out on a daily basis. There is a good chance that the way you run your business today is not the way you were running it when the new year started. We asked our writers to create articles that help you run your business while maintaining your social distancing.
Small businesses everywhere are facing the most difficult times they've ever encountered. As COVID-19 continues to wreak its havoc, countless small businesses have already permanently shut down, and many more are trying to figure out how they're going to get through this crisis. For those trying to weather the storm, figuring out how to maintain and/or restore cash flow is critical.
Try to remain rational.
When things are bad, you may tend to jump to the worst possible conclusion, and while it's certainly good to be prepared for worst-case scenarios, don't overreact about the state of your business. Keep your outlook realistic, but explore all possible avenues that can keep cash coming in before you make rash decisions that you won't be able to undo.
If you're looking for ways to maintain or restore cash flow, that means you haven't given up. Your customers/clients need to know that you are still there and how you're handling the situation. Utilize the communication channels available to you to get out your reassuring messaging. Use your mailing list and social media presence to communicate any changes you're making and remind people that you still want to do business with them. Use these channels to let them know how you can make their lives easier in a time when virtually the whole population is facing new challenges. Marketing is still important, but your message needs to be relevant. Your customers and clients need to know how you can provide value in a time like this, and if you can demonstrate this effectively, you can still get business.
Focus marketing resources where you get the best results.
As you spend your marketing dollars, you're going to need to be more discerning. Allocate more of your resources to channels where you're already getting the most bang for your buck. If you're getting the best results from social media campaigns, that's probably where you should be putting the majority of your marketing budget. To maintain cash flow, you need conversions. Go with what works. Save the experimentation for later.
Negotiate, negotiate, negotiate.
Talk to clients, vendors, and anyone else you have a business relationship with. Try to negotiate on contracts that give you more wiggle room on the expense side, and be willing to give that wiggle room to your clients, as well. Flexibility can keep an important relationship from becoming a non-relationship. In other words, some money coming in is better than no money coming in.
At the same time, it's important to note that any leeway given should be understood to be temporary.
Scotwork North America CEO makes a great point (1): "The changes you make to an agreement in order to address current issues can become the new norm unless you put limitations and qualifiers on the terms that you’ve agreed to. For instance, simple phrasings, like 'one-time' or 'COVID-19-related,' can help you to ensure that the other side doesn’t come back, post-crisis, expecting your generosity to continue ad infinitum. Instead, you’ll be in a position to limit the changes that were made during an extraordinary moment in time."
Figure out your loan options.
As you likely know, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law and includes a $349 billion Paycheck Protection Program. The United States Small Business Administration (SBA) said on April 2 that (2) it has already "initiated a robust mobilization effort of banks and other lending institutions to provide small businesses with the capital they need."
SBA Administrator Jovita Carranza commented, “This unprecedented public-private partnership is going to assist small businesses with accessing capital quickly. Our goal is to position lenders as the single point-of-contact for small businesses – the application, loan processing, and disbursement of funds will all be administered at the community level. Speed is the operative word; applications for the emergency capital can begin as early as this week (week of March 30), with lenders using their own systems and processes to make these loans. We remain committed to supporting our nation’s more than 30 million small businesses and their employees, so that they can continue to be the fuel for our nation’s economic engine.”
Get in touch with a bank representative to begin the process and discuss what other financing options are available to you.
Save by working from home
There's a good chance you are already working from home with staff working remotely if you are fortunate enough to be in a line of work where this is feasible. If this is the case, determine how a set-up like this can work over the long term. You can eliminate some major expenses by continuing to utilize a distributed work environment. The removal of office space costs from your budget can ease some of your cash flow concerns.
If you sell items that could be sold online, but you haven't begun doing so, now is the time to get into the e-commerce business. Americans are being told not to leave their homes when they don't need to, and even once this "lockdown" is lifted, many consumers may remain hesitant for some time about going out and shopping. Give them the option to buy from you online, and make the experience as simple as possible. Make sure customers are aware of your online store by letting them know via email and social media. Remind them that they can still support local business when shopping online.
Look for a realistic pivot opportunity.
You may need to shift your focus to a different stream of revenue. Are you equipped to offer a different product or service that is more useful to people given the current situation? It’s amazing how resilient and innovative most small business owners are. For example, USA Today reports (3) about an arts and crafts entrepreneur pivoting to create facemasks in a time where demand has skyrocketed for these. Similarly, NPR reports (4) on a startup called Tissue Plus that launched a toilet paper subscription service as store shelves across the country are frequently without this necessity.
Image via Facebook
Your pivot doesn't have to be as directly tied to the crisis as these particular examples, but they do illustrate how businesses are thinking on their feet.
Tap your emergency fund.
Hopefully, you had an emergency fund in place before the coronavirus tragedy struck. If cash flow has all of a sudden become an issue, this is the time to tap into it. We have a worldwide emergency on our hands, and this is a situation far more extreme than any emergency you likely envisioned when you began saving. An emergency fund can help serve as a buffer when cash flow dries up. If you don't have one, do your best to start one as soon as possible if you are in the position to do so. Nobody knows how dire things will become before this is over.
For help on financial assistance or further advice on your small business’s cash flow, please contact us at [INSERT YOUR FI PHONE/EMAIL].
If there's a silver lining to the COVID-19 crisis for small businesses it's that many are going to find out how resilient they really are. You may even come out the other side of this with a more efficiently run business as you've focused on the things that are most important to keeping you operating cash flow positive.