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2 Key Actions You Must Take To Help Your Small Business Survive Covid-19 Shutdowns

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Covid-19 Shutdowns

With another round of COVID-19 shutdowns looming, more and more small businesses will be wiped out. Taking these 2 things could save your small business.

With many states contemplating reinstating COVID-19 shutdowns again, one common voice we continue hearing is that of small business owners who are rightfully scared for their businesses. It is not surprising as small businesses across the country that made it through the initial COVID-19 shutdowns are now facing an existential threat, yet again. Many of such small business owners are already looking for ways to go into survival mode (again) to protect their businesses and livelihoods.

For the majority of small businesses, surviving this latest round of economic downturn will be even more challenging. If you are a business owner, surviving this economic difficulty and your ability to recover afterwards will require vigilance. Of all the complex strategies needed, your plan must start with these three fundamental building blocks:

Be Vigilant With Your Cash Flow

Proper management of your cash flow can make or break your business, especially during challenging times. Without a real sense of your cash flow, you cannot move forward. Start with your cash flow forecast! Your cash flow forecast needs to be reviewed and updated so you’re better prepared for the future. Look into your projected sources and uses of cash, then revisit cash flow best practices. With a well-implemented cash flow plan, you’ll be able to navigate the road ahead and recover more quickly.

Here are a couple of examples to jump start your strategy:

Get cash in as quickly as possible

Seize every opportunity to maximize cash inflow by offering cash reductions to customers and clients who pay more quickly.

Make your cash reserves last as long as possible

You also want to make sure that the cash you already have lasts as long as possible. To help, reschedule where you can toward a longer payment period for outstanding expenses. One such area to consider is taxes. Considering payroll tax deferral and taking control of when you pay your taxes in your tax planning strategy may be helpful in ensuring that you hold on to your cash as long as possible. Another opportunity to do just that might be with your vendors. Head to the negotiation table with your vendors, keeping in mind that many of them are facing the same issues you are.

Keep as much of your cash as possible

Look through your expenses with a fine comb and cut down or out all those expenses that your business could do without, at least for now.

Amplify your liquidity

Secure capital before you need it through extended low interest loans. Keep in mind that the U.S. Small Business Administration makes easy-qualifying loans available during times of national economic crisis, in addition to its usual funding programs.

Protect Your Balance Sheet

The devastating economic impact of COVID-19 is rapidly unfolding. How do you move your business forward during this unprecedented volatility? Through a healthy balance sheet. In these times of economic uncertainty, as a business owner you must become more vigilant in reducing the risk to the balance sheet, and you must do so while navigating the complexity of predicting all possible scenarios in a shifting environment.

Where do you begin? I’d like to share a very simple 3-step strategy to defending your assets and balance sheet. While following these steps, make sure that all your stakeholders or departments i.e finance, business development, marketing & sales, HR teams are working closely together to enable a holistic approach.

Step 1: Identify what’s exposed to loss.

That means tangible assets like buildings, property, inventory, equipment, vehicles, technology, and employees. You also have intangible assets exposed to loss including, proprietary information, intellectual property, trademarks, and your reputation and brand value.

Step 2: Assess the impact.

Now that you know what can be damaged or lost. The next step is to answer the question, “how bad will it hurt?” The job here is to measure the quantitative and qualitative impact. Assessing the impact of “damage” means thinking outside of the box; it requires asking hard questions about what you must do the next day if you no longer have access to property, people, or market.

Step 3: Implement and monitor your strategic planning.

This is where great plans often stall. Now that you’ve identified what’s at stake and analyzed how bad it can be, you must put measures into place to prevent, respond, and recover. This is no time for home-gamers, so I encourage that you utilize the help of experts.

Although there may be some light visible at the end of the tunnel now that there is tangible talk of vaccines for COVID 19, there is no doubt that the economic recovery will be long and arduous. For small businesses, that means making through a few more months of limited business activity. To return to your regular operations, you’re going to need not just for the economy to reopen and for customer demand to restart. You also need a healthy financial footing. Managing your cash flow effectively and insulating your balance sheet from risk will give you that strong financial foundation to help you not only weather the economic effects of these latest shutdowns but also reboot your business once the economy returns to a somewhat normal state.

Something Wasn't Clear?

Feel free to contact me, and I will be more than happy to answer all of your questions.

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