Six Financial Tips for Small Businesses to Survive The COVID-19 Pandemic

The coronavirus pandemic has presented the most challenging economic environment this country has seen in nearly a century. It seems so long ago when the stock market was roaring, and America was at full employment. But times changed very quickly. Firms that were flush with cash in February are now cutting costs and applying for financial assistance. Unfortunately, some businesses have closed their doors forever.

Every business owner is trying to assess where to go from here: how to get money, how to retain staff, places to cut costs, and ways to attract business once social distancing restrictions are loosened. We have gone from a time of immense prosperity to a period of great uncertainty in a little under two months.

Below are six tips I have been sharing with business owners to improve their financial situation during this challenging period.

Tip 1: Access Payroll Protection Plan (PPP) Loans and Other Emergency Funding Options

The Treasury Department and the SBA have made billions of dollars in Payroll Protection Plan (PPP) loans available to small businesses to help them survive the current economic storm without laying off their employees. In addition, local entities may have state, county, or municipal grants available. If you do not get a PPP loan, you can also try applying for an SBA Economic Injury Disaster Loan to cover losses due to the coronavirus pandemic.

Once things get back to normal, you might want to apply for regular small business loans to cover your working capital needs. Almost everyone is short on cash right now, which brings me to my second point.

Tip 2: Cut Costs and Preserve Cash

While this is a down period for many businesses, it can be a productive time. Use inventory already in stock, cut staff hours if possible (but be careful you don’t violate any PPP rules), and renegotiate contracts if you can – including the lease if you rent an office or a storefront. Figure out ways to hold onto the cash you have on hand. If your credit cards have high interest rates, pay them off on time and in full. Otherwise, pay cash if you can. Many companies are cutting travel expenses and utilizing conference calls and online virtual meetings to conduct business. See if you can find equipment and supplies that you need online, where prices are often cheaper.

Tip 3: Monitor Your Expenses

You cannot save money unless you know how much you are spending. If you are trying to do your own accounting, but find it hard, hire a professional. Know where your money is going and determine whether the things you are spending on now are things that you might be able to do without. The financial aspect of running a business is typically the thing that business owners like least, even though it is critical to the success of the firm. But now is the time to be extra precise with your finances. Unless you are running a charity, every business seeks to make money. Otherwise, why do it?

Tip 4: Stay on Top of Your Revenues

Do not sit on your accounts receivable. As soon as you have provided goods or services, do not delay in sending the invoice. If you are not in a hurry to get paid, customers will take their time in paying you. Keep after deadbeat clients. Follow up diligently on invoices that are past 60 or 90 days. If a customer continually is late paying and does not pay in full, he or she might not be one that you want to continue a business relationship with over the long haul.

Tip 5: Plan for Growth

Just as the owners of seasonal businesses have learned, slow periods are times for planning. While it is difficult to know exactly when the economy will open again, setting a plan in place will help you to strategically rebuild your business. Perhaps during the coronavirus pandemic you have seen an unmet need in the marketplace and can offer a product or service that other companies or consumers are asking for. To survive this crisis, business owners must be ready to improvise and innovate.

Tip 6: Don't Panic

President Franklin D. Roosevelt said it best during the Great Depression: “We have nothing to fear but fear itself.” Do not become paranoid about all bad news related to coronavirus. Limit the amount of news reports you watch, and do not watch at night. Reach out to friends and colleagues who seem to be navigating the financial storm well and find out how they are doing it. Look for the positive. For instance, if you own a restaurant and are worried about how much capacity you will have in the future, start making plans to permanently expand your take-out and delivery menu. Now is the time to adapt so you can be ready for the “new normal.”

These are anxious times, no doubt. Every business owner is concerned about the future, especially since it currently feels so uncertain. We may be looking at long term systemic change in many industries, such as restaurants, movie theaters, concert halls, and personal services. Follow these six tips and be ready to roll with the changes.