Six Financial Decisions To Protect Your Business During The COVID-19 Crisis
If you are worried about the outcome of this slowdown, there are some financial moves you can make to protect your position.
With the coronavirus pandemic tightening rules and restrictions around the world, it's natural for entrepreneurs and businesses to see a growing concern rise with respect to surviving this market. Indeed, it's safe to say that it will get challenging over the next couple of months until we resolve the issue at hand. During these rough times, it is vital to take some time and understand the financial position of your business, and plan for multiple possible scenarios expected. If you are worried about the outcome of this slowdown, there are some financial moves you can make to protect your position. Here's how:
1. Identify ways to cut back The time for a cleanse is now. Dig into your ongoing expenses, and identify the ones you can eliminate. In this modern age, apps and softwares help us with our day-to-day tasks. It's a blessing and a luxury. But this is a time to ask yourself: "Do I need this?" Cost-cutting is not built for comfort. You will go through changes within your business, but every little effort will help you improve your financial health. Take it as an exercise to identify necessity, and cut out luxury.
2. Plan for every outcome There is a best-case scenario, a worst-case scenario, and everything that falls in between. You cannot avoid the outcome, but you can prepare yourself for it. Run various scenarios through your cash flow projections. Revenue will take a big hit during this time. Payments will be slower than usual. Cash inflows will become a burden. At this moment, we cannot predict when this pandemic will end. As such, if you have devised a protocol for all possible outcomes, you'll be ready to let it take motion when the time comes.
3. Review your debt As uncertainty grows, so will the inquiries on debt settlement. Identify your current cash position, run through the numbers, and create a payment plan. At times like this, it is essential to maintain a cash flow balance. Do not pay out more than what comes in. Pay once you get paid. It may seem plausible to clear your debt today. However, it may not be the best decision right now. Also, do not hesitate to reach out and ask for an extension. Everyone is in the same position as you are. We will all get through this together.
4. Find new sources of revenue A change in the way businesses operate is not necessarily a bad thing. It opens the doors to a new opportunity. Ask yourself: "How can I operate a business and offer customers our services in this new business lifestyle?" Adapting to the changes in the economy is how businesses make it through difficult times. It is a new opportunity for your business to evolve in a new, unfamiliar market.
5. Protect your cash flow Cash is the oxygen to a business. It flows in and out, keeping the company alive. As long as you have it flowing in, you can make it work. You cannot have a business without cash outflows. A well-balanced cash flow maintains an equal and controlled level of cash inflows and outflows. Engage in new payment options to encourage cash flow. Offer early payment cashback if possible. Survival is the key element here. Always protect your cash position in this market.
6. Make the most off current clients It is a time to support one another, and not gain off of the situation. Treat this as an opportunity to build loyalty with your clients. Offer them special rates to get through this. Be by their side, and maintain the relationship. After all, loyalty is the best investment a business can have. It protects future income and influences new ones.
These are the times to protect our financial position. Take every measure possible. At the end of the day, there is no definite way for a business to protect itself from financial difficulties, but it all boils down to taking smart decisions early on. Good luck!