Take these five proactive steps today to create a more robust financial future for your small business in light of COVID-19.
In these turbulent times, you still have the power to shield your business from financial turmoil. From the way you sell products to securing funding, here are five steps you can take today to protect your small business.
Evaluate Your Financial Situation and Loan Options
The first step is to organize your finances to get a better understanding of your costs, expected cash flow, and options when it comes to securing additional financing. Create a cash flow projection and test different scenarios. How long will you be able to pay essential bills given a reduction in or absence of sales? Depending on what your cash flow projections show, you may want to increase liquidity in your business through either credit cards or a business loan.
For many small businesses, payroll represents a large expense that can be very difficult to cut.
On the one hand, if customers are not coming through the doors (physical or virtual), keeping employees on the payroll may seem like an unnecessary expense. On the other hand, employees are often the backbone of your business. So you’ll want to approach the termination of contracts with consideration.
The Paycheck Protection Program (PPP) offers one option to ease the expense of payroll without having to let any employees go. The SBA will forgive loans if all employees are kept on the payroll. And the money is used for fixed expenses. Such as payroll, rent, mortgage interest, and utilities.
Rethink Your Business Offerings
Now is the time to get creative about ways you can offer your products and services to customers. Discounts, product bundles, and gift certificates are all obvious choices, but there are ways to go beyond that.
Any service-based small business will benefit from coming up with a couple of online event ideas. For example, if you run an agency that offers consulting services, you can offer the same services in virtual form. Or, if you run a hair salon, you can offer online consultation and customized color kits for delivery.
The main question to ask here is, how can you adjust your products or services in a way that can help customers during shelter-at-home restrictions?
It may also be a good idea to partner up with other local small businesses in industries that are complementary to yours. Giving customers the ability to buy goods and services from both businesses in a single transaction can provide much-needed convenience. It’s also a great way to round out your offerings.
For example, if you’re a graphic designer, find a marketer or a digital marketing specialist to work with and offer packages that companies can purchase. Or, if you’re a small accounting firm, perhaps you can team up with a lawyer to provide better guidance to people in these challenging times.
Make It Easy for Customers to Buy From You
Even if you had to close your physical doors to customers. It doesn’t mean you need to close down your operations completely. There are numerous ways you can keep your business running without physical interactions with customers.
You can, for example, extend the home delivery of your products, or offer curbside pickup. If you can’t afford to hire delivery personnel, explore different delivery apps. If your products aren’t physical, increase your virtual offerings.
Making payments easier for your customers can go a long way as well. Switch to paperless payments as much as possible and allow customers to pay you online via credit card or ACH. To avoid contamination risk on your end, you can use FINSYNC Lockbox to handle check payments, which will be remotely deposited into your account for you.
Utilize Your Network
Your customers are not the only group that’s affected by changes in your business. It’s a great time to reach out to your entire network.
Get in touch with all of your key business relationships — suppliers, partners, consultants, etc. — and ask how they’re doing. Open up a conversation where all of you can work together to find ways to make it through the current situation, and beyond.
Perhaps you have experience in areas like how to work remotely or deal with a disaster that you can share with others, and vice versa. Sharing your knowledge will earn you some goodwill as well.
Increase the Liquidity In Your Business
In light of the COVID-19 situation, the U.S. government passed the CARES Act, which offers small business relief. You can apply for either an SBA Disaster Loan or a Paycheck Protection Program loan, which can be partially or fully forgiven. You can apply for both of these SBA Disaster Loans online.
Additionally, you can turn to private sector programs. For example, Facebook dedicated $100 million in grants to small businesses. Other fintech companies that specialize in small business loans are also expanding their offerings. In order to help small businesses get through this challenging time.
You can also renegotiate the terms of your current debts. Because many banks and financial institutions are now offering better terms for new loans, some existing loans are eligible for better terms as well.
Finally, as you await your small business PPP funding or Disaster Loan assistance, you can increase the liquidity of your business by tapping credit you already have. FINSYNC makes it simple to use your credit card to make payments for traditionally cash-only expenses, including everything from rent to vendor payments.
Taking these five proactive steps now will not only help you weather the current disruption, but prepare for a full recovery when this storm passes.