Once thought of as nothing more than the flu, the novel coronavirus ripped through the country, sparking a national pandemic. Federal and state officials attempted to slow the spread by implementing stay at home orders, social distancing rules, and temporarily closing millions of non-essential businesses. After a while, the widespread panic, demands to shelter in place, and rising unemployment rates begin to negatively impact small businesses nationwide.
Despite the financial assistance, emergency savings, and contingency plans, the rapid decline in sales left companies with smaller budgets and fewer resources underwater. With inventory piling up, bills are accumulating, and limited cash flow to cover overhead costs, the debt continues to mount, causing an undue amount of pressure on small business owners.
The economic impact of the current pandemic isn’t something anyone could have predicted. If companies are going to survive these uncertain times, developing a plan to manage their finances is critical. Below is some advice.
Cut Back and Save
The key to keeping business debt under control is spending less than you earn. If sales are low during the pandemic, you need to tighten your grip on saving and eliminating unnecessary expenses. Review your current finances to see where the most money is going. Then, do some research to determine the best ways to save on those expenses. If you’re paying for something, you don’t need, eliminating this from the budget can free up cash you need to keep the lights on.
Contact Vendors, Creditors, and Service Providers
As a means of staying in business and servicing consumers’ needs, many vendors, creditors, and service providers are willing to negotiate. Realizing that everyone is going through a rough time, companies have loosened restrictions, lowered costs, and implemented financial assistance programs.
Rather than allow your bills to get out of control, reach out to get assistance. You may find that they are willing to eliminate late fees, lower interest rates, offer a settlement amount or allow you to make smaller monthly payments until you’re back on your feet.
Consider Debt Management Services
If your business debt has gotten out of control, there are service providers that can lighten the load for you. Debt management companies help individuals and businesses to reduce their debt dramatically. Through their knowledge of fair debt collection laws and negotiation tactics, representatives can work with creditors, utility providers, and vendors to lower out of pocket costs. They’ll help you regain balance in your company finances through structured payment arrangements with low monthly rates and debt settlement offers.
Cater to Your Customers
Empathy is needed now more than ever as the entire world deals with this health and economic crisis. If you’re going to keep business afloat, you must cater to your target audience’s needs. Creating an eCommerce site, for instance, reduces the need for in-person visits while giving customers 24/7 access to your products and services. Partnering with a same-day delivery service allows consumers to get things delivered to their front doors. If you’re able, going mobile and bringing your services to your customers is another good practice.
For small businesses that extend credit or financing, extending the same courtesies to your customers that your creditors, vendors, and service providers extend to you is recommended. Be flexible with due dates, late fees, interest rates, and installments to make it easier for your customers to manage.
Look Beyond Sales
Regular sales aren’t the only way your business can make money to cover your debts. Use these inconvenient times to develop new ways to improve your cash flow. You can sell company equipment and supplies, share rental space with another business, or markdown prices to reduce inventory overstock.
Even after a vaccine or treatment has been developed for the novel coronavirus, economic recovery will take years. If small businesses want to survive these times, they must learn how to manage their debt effectively. By implementing strategies such as those provided above, weathering this storm becomes easier to manage.