With the future looking more uncertain than ever, small businesses across the world are struggling to keep their finances in order and their companies afloat. The current COVID-19 crisis means small businesses need to take a few precautionary steps to protect themselves and prepare for the future of their company.
Optimize Cash Flow
The first thing to consider in these uncertain times is how you can proactively work to optimise your cash flow. Reach out to customers who owe you money, but do so as empathetically as you can – remember that they are also dealing with the same issues and anxieties as you are. Approach these conversations empathetically and be prepared for them to be uncomfortable. You should also look into collecting on bills which may be past due. These acts can be the difference between whether your small business survives the foreseeable future or not.
Whether your business is currently open to the public, functioning as an essential service, or currently suspending business, it may be prudent to re-think your existing payment terms. The process of taking on new business is going to look vastly different as the world adjusts to the new normal. You will have to consider the unique financial position of each new customer or client and may need to implement new requirements such as prepayment or simply shortening your terms of payment.
Build Three Forecasts
If this is not something you have done yourself before, you may want to consider hiring a bookkeeper or accountant to create forecasts for your business. There are plenty of remote workers available at the moment, with many financial services becoming available through cloud-based programs.
It will be advantageous to generate three distinct forecasts for the future of your business: a best-case-scenario, optimistic forecast; a more likely, realistic forecast; and a worst-case-scenario. Creating these cash flow forecasts in advance will ensure you are better prepared to handle whatever comes your way. Use this opportunity to lay out predictions for sales and project potential expenses.
John Gilham, a tech blogger at Australia 2 write and Brit student, says: “Even in the best of times, running a small business is always going to be somewhat unpredictable and is a constantly evolving sector.” Having these projections for how you will handle your company under a range of circumstances and possible situations puts you in the unique position of being prepared for any eventualities, whether this is a surplus or a shortage or anything in between.
Plan for a Cash Flow Shortage
Of course, when it comes down to it, you are going to need to prepare more in advance for a cash flow shortage than any other eventuality. This means identifying the best ways to minimise your company expenses as much as possible in the case of a cash flow shortage. This includes creating a game-plan for potentially re-negotiating more fixed costs, such as rent payments, as well as listing the more flexible costs which could be simply eliminated if necessary. This means understanding how to prioritise your various expenses and planning for different levels of financial insecurity.
Luckily, there are a range of programs currently running which are offering various kinds of support to small businesses across the globe, including government funding and independent charity or non-profit groups. Sharon Jackson, a business writer at 1 Day 2 write and Next coursework, explains: “There are also many generous individuals offering financial support to small businesses and more opportunities than ever to find whatever kind of financial support your business needs online and remotely.”
Even without the impact of the current global crisis, managing and maintaining a small business successfully is a challenge. With everything going on right now, at least take comfort in knowing that you are not alone. Everyone is struggling and, as a result, people are banding together to support each other through these difficult and uncertain times.
Regina Wheeler is an e-learning consultant at Write my thesis and Dissertation writing service. She has been involved in many successful business projects with a range of companies throughout the country. Regina enjoys researching, discussing, and writing on the topics of management, marketing, and finances. If you want to read more of her work, you can find it on Originwritings.com.