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Small Business Financial Tips to Weather the Pandemic

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Most of 2020 has been a year we’d all like to forget insofar as it has been tremendously challenging due to COVID-19.

In the U.S. lockdowns, social distancing and other pandemic requirements are working – almost.

Since reemerging from lockdown in July 2020, many states have had an alarming rise in new cases of Coronavirus. Florida, Arizona and California – the sunshine states have people worried about the potential of contracting the virus. Other states are not in the clear either, and daily cases are still in the tens of thousands across the nation.

The business community has been left wondering where this pandemic is going to leave them – in business or not?

How small businesses can successfully navigate COVID-19 and economic fallout

The focus is on cash flow and liquidity and options for business loans to keep afloat. Plus other strategies they can use financially to continue.

The following are tips for small businesses as uncertainty and declining market are likely to continue for the short-term, at least.

Boost Liquidity

If you haven’t already done so, now is an excellent time to address any potential cash flow and liquidity issues. Although lockdowns are lifting, many places are still placing pretty significant restrictions on businesses, even if they can technically reopen.

You should try to maximize your cash inflow as much as you can. For example, offer discounts to customers who agree to pay their invoices faster.

If you have outstanding expenses, try to work with your vendors on longer repayment timelines. Many vendors are going to be willing to work with you, but they are also facing their own issues.

You can also get more credit, which is where a small business loan can come into the equation. There are different types of small business loans and if Covid-19 impacts you, you may be able to apply for a low-interest SBA loan.

Record Losses

As you move forward, keep a careful record of all your losses related to the virus and shutdowns, as well as losses that occur throughout phased reopening.
When you keep good records, then you’ll be in a better position to make a claim for your business insurance. There may also be help available from the federal government and your local small business administration.

To get a true understanding of your losses, you’ll need to calculate a baseline from the past two-to-three years before the pandemic.

Another benefit of carefully maintaining your records during this time is that it will give you a full picture of your financial situation. If you are facing serious trouble, by recognizing it early on, you’ll be in a better position to figure out ways to remedy it.

Don’t Get Overwhelmed by Late Payments

If you aren’t able to pay your bills right now, you aren’t alone. Many small business owners are in the same position, but they can not simply ignore the requests due to late payment fees.
This can mean you end up paying a lot in late payments and it can be harder to get yourself where you need to be as you recover from the fallout of Covid-19. Instead of ignoring anything, be in constant contact with people you owe money to. Let them know the situation as soon as you can, and see what you can work out.

Can You Cut Spending?

There may be avoidable expenses that you can identify. In some cases, you may realize you can continue cutting those costs even after the immediate effects of Covid-19 start to subside. For example, maybe you’re paying for a larger space than you need, or perhaps you can reduce your ongoing overhead by continuing to have your employees telecommute aka remote working.

Where are the areas you can focus on optimizing your burn rate?

Are there places you can both cut expenses and perhaps improve your own output and productivity?

Identify Opportunities

Out of every crisis comes opportunities, but you have to take yourself out of that emergency survival mindset and move into one of innovation.
Take the time to look at your industry and competitors and what the future might hold in your market.

Are there new opportunities you can take advantage of now?

How might this situation positively transform your business?

You could find that when social distancing measures are entirely removed, you’ve added a new source of revenue or made your business leaner without sacrificing quality.

Finally, explore all financial assistance options. There are city-based options as well as state and federal programs. There are also programs specifically for certain businesses for minorities or woman-owned businesses.

There’s a lot out there, but it takes time to look and find financial resources. While small businesses are undoubtedly hurting right now, it doesn’t have to mean the end.

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