In the midst of the COVID-19 pandemic and a hard-hit economy, businesses small and large are facing tough issues, like how to continue bringing in revenue, how to continue paying employees and provide work for them, how long to keep their doors closed to foot traffic, and more.
While dealing with today’s financial issues should take priority, keep in mind that every crisis can also be an opportunity to build credibility with customers and position yourself as a reliable partner through even the toughest of times. Here are four steps to take today to ensure your business is in the best possible financial position and is poised to become an even stronger company down the road.
1. Review your current financial situation
It is important you take a detailed look at your financials, make lists of fixed and variable costs, prioritize expenses most crucial to your business, and eliminate non-essential costs for the time being. Do a thorough review of your cash flow situation, and stress-test your financial plan for various scenarios to determine how long you can sustain operations despite decreased revenue. Using this information, you can outline a crisis management plan, but remember to keep it flexible. Given the uncertainty of the situation, it is important you remain agile.
As you review your financial plan and crisis management plan, talk with your business partners and let them be part of your plan. Your attorney, CPA, banker, and others are experts who are there to help you make decisions. Ask them what changes are taking place in their businesses that can benefit yours. You invested in building relationships with these partners for times like this, so let them be there to help think through next steps for your business.
2. Learn about financial relief available for your business
As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, federal financial relief has become available to businesses. The Small Business Administration (SBA) is offering relief in the form of the Paycheck Protection Program (PPP) and Economic Injury and Disaster Loans (EIDL).
The PPP provides small businesses with forgivable loans to pay up to eight weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent and utilities. For more information on how to apply, who is eligible and answers to FAQs, visit the Bankers Trust or SBA websites.
An EIDL is meant to cover working capital costs as a result of economic disasters. Costs like payroll, rent, accounts payable and business debt are all eligible to be funded under the disaster loan programs. You can apply for this loan directly through the SBA.
While you may obtain both a PPP loan and an EIDL, funds may not be used for the same purpose. Consult with your banker or an authorized SBA representative for more details.
3. Adapt and improvise
For many businesses, going back to the basics and focusing on what their business does best is the most efficient use of time and funds. Other businesses may find they can expand production to provide goods and services they do not normally provide but have high demand at this time. Examples include masks, face shields, sanitizer and more. Do what you can to meet your customers’ current needs without stretching into unfamiliar territory or taking on excessive risk.
4. Explore new opportunities and look ahead
Take this down time to revisit your business plan and priorities, as well as explore ideas you did not have time for before. While dealing with today’s financial issues is priority, it is also important to think about how you will position yourself for reopening and going back to usual business.
With every crisis comes opportunity, and this can be the push for your business to become creative with its services, whether that means expanding your online capabilities, improving to-go and contactless services, or enhancing remote work capabilities.
While we are living through uncertainty, one thing is for sure: The way people buy products and services has changed and some of those changes may last well into the future. The key to your business’s success during this time is to be adaptable. Ask yourself, “What long-term effect will this crisis have on the way my customers buy my goods or services?” Anticipate those changes and adapt to meet them.
While your business may be going through its ultimate stress-test today, be sure to focus on the things you can control, keep your eye out for opportunities that may arise, and look forward to the time things improve (yes, it will come!).