The rampant spread of the COVID-19 has forced the world into lock-down and pushed the global economy to the brink.
Companies have and will continue to close. Employees have lost their jobs.
Companies that have transitioned to providing services online, and employees that can work from home are considered fortunate by the many completely unemployed or out of business.
There is no information, at this time, to when businesses and employees can return to normal, as a matter of fact, what will normal be?
Back to “normal” could be a long, difficult journey. Small businesses often do not have large cash reserves readily available to fund this type of business interruption.
When you have no control over the economy, no certainty over what your revenue will be over the next 6,12 or even 18 months, and how you’ll pay your employees and the overhead, you may feel powerless and fearful.
Fear is widespread and is valid right now. As the pandemic continues to impact on our health and the world economy, fear to this level is something we have never experienced. So how do we overcome the fear and prepare for the unknown?
Use your time proactively, take a hard look at the true financials of your business.
Your Current Revenue: The revenue of your business, or lack of, will determine how aggressively you will need to figure something out to survive the storm. Determine the following:
- How much available cash do you have to meet the businesses financial obligations?
- If you cannot honor your financial obligations, what can you do to mitigate the impact?
- Have you looked into resources being made available, like business loans, deferred rent and interest reductions?
- Can you generate revenue for the business differently than you previously have?
Creating breathing space in the short term by addressing the real financial position of your company and dealing head on with the challenges, may be the difference in having a business once the pandemic is over, or not.
Your Fixed Expenses: Mortgages, equipment leases, vehicles, utilities costs and other fixed operating expenses are going to be the biggest challenge if your revenue has been impacted significantly. If you are not going to be able to meet your financial obligations:
- Do not hide! Call each creditor and let them know that you will need to make payment arrangements. It is a snowball effect, you don’t pay, they can’t pay. Give them a head’s up so that they can create a plan for their business.
- Make the payments you can!Monitor your finances carefully and pay what you can. Deferring payments now does not mean you may not have to pay them in the future. Deferring to many payments could cause a financial crisis for the business in the future.
- Look at all required payments! Are you paying monthly for internet, phones, subscriptions, coffee services that you really do not need?
When economic times are good, finances are often not looked at with an eye to cutting costs. Non necessary costs are either not visible or easily ignored if money is not an issue. Use this time to reshape your business and prepare for the future.
The “NEW NORMAL” as we come out of this is unknown and may be a blessing in disguise.
Just because you have always done things a certain way in your business, doesn’t mean that it was working the way you wanted it to.
Use this time to look at your business with fresh eyes and change what you need, to ride out this economic storm. There will be some opportunities for business growth, amidst the panic and chaos.