by Eddie Davis, VP of Business Development for FINSYNC
What happens to us is not nearly as important as our reaction to what happens.
This adage feels particularly pertinent these days, as we all face daunting uncertainty about how the business landscape will be reshaped.
While the coronavirus pandemic and the massive economic disruption caused by the broad shutdowns and mandates for social distancing have hurt all manner of companies, startups and other small businesses are shouldering the worst of the pain and uncertainty.
But even small businesses can put themselves in better position to weather these turbulent times. Innovations in financial services, communication and many other areas are making it possible for companies to regroup and divine alternative ways to keep their business going.
Consider how quickly many restaurants and brick-and-mortar retailers have been able to switch gears and find other ways to serve their customers. Even cruise lines are finding ways to woo customers, with some companies recently reporting strong demand in bookings for 2021.
The takeaway is that even when things look bleak, there are still steps you can take to ride out the uncertain present and lay the groundwork for a quick recovery.
Adjust for Leaner Times.
You’ve probably already had to make some quick changes since mid-March, when government officials pressed for the temporary closure of all businesses not deemed to be essential. Those orders may have meant furloughing or laying off some or all of your employees, or perhaps your business was among those fortunate enough to qualify for a Paycheck Protection Program loan to cover your payroll costs for a while.
Either way, it’s essential that you take this time to assess your company’s finances and prepare to cut back on any and all costs that you can live without right now. Take this opportunity to renegotiate the lease on your storefront to get a lower rate, or to seek out alternative suppliers who may offer friendlier terms.
Do your finances reflect your updated expectations for sales over the next two or three months? Have you gone over all of your finances to determine what you can eliminate? What does your “new normal” budget look like?
If you have the financial flexibility, this could be a good time to invest in software to centralize and automate your back-office tasks, such as payroll processing, making payments, and invoicing customers. Even if you forgo a software solution, it pays to streamline your back-office operations.
One way to start is by coordinating your accounts payable and accounts receivable. That means sending out invoices to your customers on a deliberate schedule. This schedule should be driven by when you will need to meet your most pressing cash needs, like covering payroll, paying your bills, and other key expenses.
Optimize Cash Flow.
Are you having a tougher time managing and predicting your cash flow these days? Getting a good handle on your cash flow is essential to functioning efficiently, not to mention turning a profit. Technology can simplify this process by providing you with a real-time view of your cash flow more quickly and easily than bouncing around between various accounts online, or spending time filling in a spreadsheet with your accounts payable and receivable.
What you need is an overview of cash flow for the next few months (at least), especially if you’re in a state that has recently relaxed restrictions on businesses, or is about to do so. You’ll need to make sure you have enough cash or access to financing to refill orders from your suppliers and any other costs that you need to deliver your product or service.
Consider External Financing Options.
If it looks like you’re going to fall short, consider your financing options. The last thing you want is to be saddled by cash flow problems as you get ready to open for business again at a time when the economy is in a recession. By now, you probably know about the Small Business Administration’s low-interest business loans. Check with the SBA to see whether you qualify for such funds.
Online lending companies can also be a reliable source of small business financing because they often have less stringent requirements than traditional lenders. Unlike traditional financial institutions, alternative lenders analyze a variety of data to obtain a broader view of a borrower’s creditworthiness.
The loan application process is often simpler and provides an answer faster than brick-and-mortar lenders. In addition, alternative lenders often look beyond collateral when determining whether a borrower qualifies for a loan.
Lean Into Change.
Streamlining your back-office tasks and getting a solid handle on your cash flow will put you in the best position to stay in business in the coming months. But whether your company thrives or not will depend on how well you can adapt your business to seize on market opportunities that arise from the pandemic.
Even as some restaurants and retailers reopen for business in some states, there’s a question about how quick people will be to return, and whether they will be comfortable sharing space in a crowded restaurant, bar or store. Consider asking your customers how they feel about returning to your place of business, and whether they prefer you to make changes in the way you cater to them. In order to adapt, you may have to double-down on your e-commerce channel sales, expand your service area, or extend your hours.
Can Your Employees Work from Home?
Another area that’s ripe for change in the wake of the pandemic is remote work. It didn’t take long for millions of Americans to quickly go from working in an office to working from home. With advances in online communications, data-sharing applications, and portals where employers can find and hire contract workers remotely, every business has access to less costly ways to bolster their employee ranks.
The pool of virtual support professionals is likely to expand now that many more people have grown accustomed to working from home. And remote workers tend to cost less because you don’t have to pay for their health insurance, sick days or other costly employee benefits.
Uncertainty Means Opportunity.
For many startups and newer businesses, these are uncertain and worrisome economic straits to navigate. But if you’re willing to adapt to changes in consumers’ preferences and focus on preserving cash flow, you can get through this time of uncertainty and come out stronger on the other side.
Eddie Davis is the VP of Business Development for FINSYNC, a consolidated cash flow management platform focused on helping businesses grow. FINSYNC’s intuitive online tools help automate payments and accounting, and provide valuable insight through cash flow analysis. The lending network gives businesses access to fast, affordable financing. FINSYNC’s virtual community of specialists provides unrivaled support with bookkeeping, accounting, human capital management, financial analysis and corporate strategy.