For business owners, their physical health is not the only one at risk in the COVID-19 pandemic. The health of their business worries them more because it could lead to permanent closure — soon.
Writer Richard McGahey said in a Forbes.com article that due to the impact of the pandemic, customers’ incomes are taking some time to get to them, and lending instruments are taking long to unclog. Because of these, customers’ demand for products and services are decreasing. If you own a small or mid-sized business that can’t afford to lose sales, you’re at a critical level. What can you do to prevent your business from closing?
Maintain Cashflow
Understandably, the biggest concern for any kind of business is cash flow. While the large companies may have some financial buffer in place, the small and mid-sized enterprises (SME) don’t always have the option. As a small business owner, you have this endless concern about how to pay your bills and workers, and how to collect payments. Instead of planning for business growth, you’re stuck with making ends meet.
If this is your case, start by creating a financial triage based on the following factors. Adjust your spending accordingly, and always review your budget.
- Fixed costs — Payments and expenditure you can’t slash out of the budget
- Variable costs — Payments and spending you can adjust or rotate
- Cost cuts — For business components that aren’t generating revenue
- Employee costs — Necessary positions, lay-offs, furloughs, terminations
If your small or medium business has a lot of accounts receivables but little money, you can get a working capital loan for SMEs by turning your invoices into cash. Find companies you can trade your outstanding invoices with for as much as 90% of the amount so that you can make your business liquid again. They usually take care of collecting payments from your debtors, so you don’t have to worry about anything else.
Look at the Big Picture
In panic mode, you might zero in on the most obvious problem and hasten to make decisions to prevent it from worsening. Who wouldn’t? It’s a natural reaction. But, is it the problem? Have you assessed the big picture?
For example, you received feedback that your deliveries are always late. Knowing that your outsourced trucking service has recently downsized, you suspected that their lack of vehicles is causing the delays. Even with a long-standing relationship with the company, you decided to discontinue their service.
Had you stepped back and examined your operations, you would’ve discovered that a communication breakdown between departments is what’s causing the delay in processing orders for delivery, which in turn, slows the delivery. Solving the communication problem would have spared an efficient delivery system and can prevent future operational issues.
Fulfil a Need
In times when money is hard to come by, customers make sure to spend mainly for their needs or the things they can’t do without. Enduring companies have learned the art of diagnosing what the society needs and offering a way to fulfil it.
In your line of business, what else can you give your customers that you haven’t provided before? What new trends are emerging that you have not tapped? Online medical consultation, for example, may have sounded strange when it was first introduced. Still, many non-coronavirus patients today rely on it for medical advice and prescription during the lockdown.
You can go directly to your customers to solicit ideas. Ask them what they like or don’t like about your product or service. Learn what they want to have that no one (not even your business) offers right now. Find out how much they would be willing to pay for such a product or service. Finding a need to fulfil ensures a guaranteed market that’s ready to buy your product or service when it becomes available.
When the economic future isn’t exactly rosy, businesses must learn to adapt fast and stay afloat. By ensuring liquidity, having a good grasp of your entire operations, and finding ways to satisfy your customers, there’s a big chance you will survive this challenging time.