Updated: Aug 3, 2020
Without a doubt we are living in uncertain circumstances. It’s incredible to see how fast it can all change! One day we are shopping at our favorite place or indulging at that restaurant, and the very next day the doors are ordered to close. While enjoying the business these places brought us with a swipe of a card, it is most likely, we did not stop to think about the importance of their business, or recognize them as the anchors of our economy.
According to the Small Business Administration, small companies represent 99 percent of all U.S. businesses and employ more than half the American workforce. Other statistics from the SBA show that small businesses create 75 percent of the net new jobs in our economy and pay more than 44 percent of the nation's private payroll. More than 50 percent of the U.S. private gross domestic product is generated by small businesses, and almost 97 percent of exporters are small businesses. After the world being hit by the COVID-19 pandemic, best believe that America’s anchors have taken an unraveling chain of unfortunate events.
If you‘re a small business owner and wondering what direction to take now, here are a couple of helpful tips to help your brand rise like a Phoenix from the ashes of today’s life-changing events.
ASSES THE FINANCIAL DAMAGE
According to Forbes Magazine the first step a business owner should take is developing a rebuilding plan for COVID-19. This means you have to determine just how deeply your small business has been affected. There are many aspects to your business so it’s important to obtain hard numbers from each layer. You can start by updating your financial statements -if you haven’t already done so- in which you will have a clear view of your profit and loss or cash flow statements. Forbes advisor Rebecca Lake adds, After obtaining exact numbers, “you can then compare them to last year’s numbers to see how much your business may be down. And while only a small percentage of business owners say they’ve benefited from the pandemic, 3% according to the NFIB, it’s possible that the damage might not be as bad as you think.”
Can’t stress enough to complete a thorough audit of every layer there is to your business, because obviously there has been changes that you have to factor in for example, Employment layoffs, advertising and marketing budget cuts, or customer migration to competitors. Keeping count of such aspects will help you identify financial resources that will put your business on the track to recovery.
2. TAKE A SECOND LOOK AT YOUR BUSINESS PLAN
Daily life is changing for the long run, forcing us to adapt to a “new normal”. As a result, your business plan also needs a modification. A point to need to specifically focus on is ho your business can pivot to adjust to a “new normal”. After looking at your plan you may conclude that you need to shift strategies, such as looking at a digital expansion, or other ways to accommodate new social changes.
3. CONSIDER WETHER YOU’LL NEED FUNDING TO RECOVER
If the circumstances has taught us anything, it’s the importance to come together and help build each other up. There’s a solution to every situation, and we don’t have to face them alone. During this rebuilding period, there are several solutions you might want to consider. SBA is an obvious choice for business loans, and there are a few programs that can help As well. One option may be The Paycheck Protection Program. This program is designed to provide funding to small businesses that are struggling to retain their employees during the coronavirus pandemic. Another example is: Economic Injury Disaster Loans, which also can help with short-term financing if you need money for things other than employee retention. Keep in mind that with the previous examples the funding is limited. Lake warns it’s entirely possible that funding may be depleted before your application for a loan is ever reviewed.
For this reason, it’s important to consider other sources of small business funding, including:
Traditional SBA 7(a) loans and microloans
Small business term loans from banks, credit unions and online lenders
Business lines of credit
Business credit cards
Accounts receivable financing
Merchant cash advances
Purchase order financing
Every source has it’s pros and cons. Only you know what your business really needs, therefore it’s important to consider which one is best for your business needs and what is within your reach.
4. REVAMP YOUR BUDGET TO ACCOUNT FOR NEW SPENDING
A business person is familiar with the saying, “You need money to make money”. It’s a basic principle, but one that holds true when it coming out of the pandemic mode. Lake explains, “you may need to spend money on hiring and training new employees or rehiring ones you had to lay off. Inventory may need to be purchased, and you might have to rev up your advertising budget again to start building fresh buzz.” Make sure to identify and have a clear idea of what you need to be budgeting. This way you eliminate the monetary waste and get your operating budget as lean as possible so that when the chance to invest in growth comes up, you’re able to take advantage of it.
5. DEVELOP A TIME LINE FOR RECOVERY
Keep a realistic point of view. Your recovery time line should help you not weigh you down, therefore it’s important to set realistic goals and prioritize your most important actions first. For example, your immediate goal may be securing funding for your business. Lake suggests “once you’ve done that, you can set a time line for rehiring employees, then restocking inventory and, finally, reopening your doors if your small business closed as a result of the pandemic”. Another important tip Lake suggests is to keep track of your progress. Because my not! Another much more important reason is because “if you’ve secured capital to fund your business, you don’t want to waste time on activities that aren’t delivering a solid return on your investment.”
6. CREATE A CONTINGENCY PLAN FOR THE NEXT CRISIS
As much as we should be optimistic, there should be a balance in that mindset. Every year time brings us surprises, some good, others may be not pleasant, such as this year. Needless to say, a there’s alway a crisis every so often, therefore it is smart to be prepared. Take this time to see how your business did in a crisis as big as this one, and learn from it. Right now, it may feel like once-in-a-lifetime event, the reality is that an emergency can come along to disrupt your small business at any time. Lake gives us great suggestions to think about for the future. For example “building up liquid cash savings may be a priority for your business if you had little or nothing set aside before the COVID-19 outbreak began. You may choose to focus on paying down your debt and trimming nonessential spending to keep your budget in check. Or you may need to find ways to help your staff work more efficiently to cut operating costs.”
Remember in hardship, there is no other way but up! Think outside the box, and don’t give up. Be sure to read in full detail the article that inspired this blog.