ExecutiveChronicles.com | After COVID-19, Here Are 6 Ways To Rebuild Your Small Business | While the short-term outlook for small businesses varies widely by industry, it’s crucial to think about how the economy will recover until it returns to normalcy—or establishes a new normal.
The great importance of having thought of an exit strategy is key to be able to bounce back from the pandemic. This advice might help you get your business back on track if you’re not sure what your coronavirus exit plan should entail.
1. Calculate the Financial Loss
The first step in designing a COVID-19 recovery strategy is evaluating the extent to which your small business has been impacted.
Starting with the hard numbers, there are several layers to consider. It’s a good idea to update your financial statements, such as profit and loss or cash flow statements, if you haven’t done so recently. Then you may compare them to previous year’s figures to see how much your company has shrunk. And, while only 3% of business owners claim to have benefitted from the epidemic, according to the NFIB, it’s likely that the harm isn’t as severe as you believe.
Consider how your firm has been affected in addition to the concrete figures relating to sales, profitability, and cash flow. If you’ve had to lay off some or all of your staff, for example, you’ll need to account for that in your rebuilding strategy. If your advertising and marketing budget has been cut, or some of your customers have defected to competitors, here are factors to consider as you look for financial alternatives to assist you recover.
2. Review Your Business Plan Once More
Your company strategy may have operated very well prior to COVID-19, but breaking out of it may necessitate some tweaking.
You may need to think about how your company can pivot to accommodate a new normal. If you previously relied on foot traffic to a physical site for sales, you may need to consider a digital expansion to suit the growing number of consumers who shop from home.
You’re not alone in this, though. Some government programs connect small businesses with mentors who can help them build—or rebuild—their enterprises following the crisis. Remote mentorship services are offered, as well as free seminars on coronavirus-related topics.
Analyzing how the coronavirus outbreak has impacted your entire industry is also beneficial. Pay attention to the trends and focus on finding opportunities when looking at your competition and the industry as a whole. Finding a gap or need that your company can serve that has been overlooked in the past could be crucial to regaining and extending your consumer base in the future.
When reviewing your business plan and model, make a list of your company’s strengths and flaws. Then consider what worked in the past but may not work as well now, and see where you can make adjustments or improvements to stay competitive. Finally, review your business objectives to ensure that they are reasonable in light of current circumstances. For example, you may have established a year-end revenue goal that will need to be adjusted now to account for the impact COVID-19 may have had on your second-quarter sales.
3. Think about if you’ll need money to get back on your feet.
If you didn’t have a lot of cash on hand before the epidemic, you’ll almost certainly need some working capital to get your firm back up and running.
There are various choices to consider when it comes to financing your small business during the COVID-19 reconstruction period. For business loans, the SBA is an obvious choice, and there are a few programs that can help. The Paycheck Protection Program, for example, is designed to help small businesses retain staff during the coronavirus epidemic by providing financing. If you need money for something other than employee retention, Economic Injury Disaster Loans can help with short-term funding.
However, both of those nationally mandated programs have funding constraints. It’s completely likely that money will run out before your loan application is even considered. As a result, it’s critical to think about various small business funding options, such as:
- Microloans and special government loans for MSMEs
- Banks, credit cooperatives, and online lenders offer small company term loans.
- Lines of credit for businesses
- Credit cards for businesses
- Tradelines between vendors
- Finance for accounts receivable
- Cash advances from merchants
- Financing for inventory
- Finance for purchase orders
- Finance for equipment
Each choice may have advantages and disadvantages. Accounts receivable financing and merchant cash advance lending, for example, are both simple options that do not require flawless credit. Both of these options could help you fund your firm in the short run.
However, they both require you to have something to leverage, such as pending invoices or credit card sales. You may have a difficult time obtaining approved if sales are slow or nonexistent. In comparison to traditional types of small-business loans and lines of credit, alternative financing choices like these can have substantially higher effective annual percentage rates.
If you’re thinking about borrowing money to assist rebuild, keep in mind that lenders are looking for proof that loans will be repaid. Examining your business and personal credit scores, as well as your business and personal financials, can assist you in determining your chances of receiving money.
4. Adjust Your Budget to Take into Account New Spending
You may have to spend money to generate money in the aftermath of the COVID-19 outbreak.
For example, you may need to spend money on hiring and training new personnel, as well as rehiring those who were laid off previously. Inventory may need to be purchased, and your advertising budget may need to be increased to begin generating new buzz.
You should have a clear concept of what you need to budget for and what you can trim to make the most of the revenue you do have coming in as part of your coronavirus recovery. The goal is to remove financial waste and make your operating budget as lean as possible so that when the opportunity to invest in growth arises, you can seize it.
Deferring your income or taking a wage cut is an extreme measure you could take during this time. Whether or not this makes sense relies on your ability to manage your personal financial commitments, as well as your savings or income from a partner if you’re married. However, postponing wages in the short term may help your company get back on its feet faster.
5. Create a Reconstruction Timeline
You may have a number of things you need or want to do to recover from COVID-19, but achieving everything at once is unlikely. Having a timetable to follow that prioritizes your most important things first will help.
Your immediate goal, for example, could be to secure money for your company. After that, you can set a timeline for rehiring personnel, replenishing inventory, and, if your small business was closed due to the pandemic, reopening your doors.
Remember to keep note of your progress as you take individual measures toward healing. This is especially crucial if you’ve received funding for your company since you don’t want to waste time on tasks that don’t provide a good return on your investment. You might want to check in regularly in the early stages of COVID-19 recovery to see what’s working and what’s not. As things begin to settle down, you can change to evaluating your business financials on a monthly basis.
6. Make a Crisis Preparedness Plan for the Next One
While the coronavirus pandemic may appear to be a once-in-a-lifetime occurrence, an emergency can strike at any time, disrupting your small business. Using what you’ve learned from this pandemic to plan for the next one can help you protect your company against future shocks.
If you had little or no liquid cash savings before the COVID-19 outbreak, for example, building up liquid cash savings can be a top priority for your company. To keep your budget in check, you may want to concentrate on paying down debt and reducing non-essential spending. Alternatively, you may need to identify strategies to assist your employees in working more efficiently in order to reduce operational costs.
The pandemic may have also taught you the value of being able to adapt and keep your business fluid so that you can weather storms pretty well. For example, if your employees previously did not have the opportunity to work remotely, you may want to consider including it in your business model in the future.
The more creative problem-solving you can undertake in front of a worst-case scenario, the better. Having a Plan B (and even a Plan C, D, E, and F) in place can help your company survive—and eventually thrive—during difficult financial times.