As the economy recuperates after taking the full brunt of the COVID -19 pandemic and the restrictions created by it, small businesses find it the most difficult to set the right recovery path. Some of the most pressing and immediate problems small businesses are facing is meeting fixed operating costs. This includes mortgage payments, rents, insurance, and utilities. Even the payroll assistance provided by the government didn’t help them in this area because of a significant decline in sales. Meeting these recurring costs has been a persistent challenge.
Navigating through this crisis and ensuring speedy recovery in the post-COVID era will require a new plan. As a small business, you will have to make significant changes in your business and operating models. Many small businesses including restaurants and independent retailers have created innovative strategies to adapt to the new normal. Many restaurants have added curbside pickup.
Essential businesses like grocers have also added a curbside pickup to limit the number of customers in their stores. Many have made changes to their business hours. Many have added new payment options, even launched new apps. Non-essential retailers have moved their product offerings to eCommerce websites. An effective
It is recommended to follow these tips to plan for your small business’s faster recovery in this new normal.
1. Financial Damage Assessment
You cannot create a recovery plan for the post-COVID-19 era unless you can learn about the true impact of the pandemic on your business. Compare your profit and loss and cash flow statements with the numbers from the last year. This can give you a clear picture of how down your business has gone. Besides the sales and profit-loss figures, check the other ways in which you have been impacted.
Consider the following scenarios before creating your new plan:
- You may have had to lay off some or all your staff
- Cuts in your marketing and advertising budget
- If some of your customers or clients have moved over to the competition
Set a small budget aside for your digital business as well. A little investment in improving your online position can go a long way. A carefully drafted SEO strategy for your business could just well be a boon to you in these unprecedented times.
2. Assess & Negotiate Terms
Once you have done your business evaluation for the new conditions, you should re-assess and negotiate new terms on your agreements. Some of the steps you are expected to take, depending on your existing agreements, are as follows:
- Reach out to your supply chain partners for new terms to reduce your recurring costs
- Assess your marketing strategies to include only needs-based strategies
- Offer incentives to customers who can ensure faster payments
Evaluate different scenarios through your multi-week cash flow model to get a clear idea of their impact on liquidity.
Make sure to assess all your key vendors and partners. Check whether they will be available in the next few months. You should plan on stocking up on materials and also create alternative pathways if your supply chain seems to be drying up temporarily.
3. Determine If Funding is Required for Recovery
Most small businesses will need funding to re-start their business operations in the post-COVID-19 scenario. There are many options to consider when thinking of financing your small business:
- You can approach SBA for business loans and select a program matching your business profile
- Economic Injury Disaster Loans can support your business if you need funds for areas other than employee retention
- Consider traditional SBA 7(a) funding options
- Explore business lines of credit
- Consider accounts receivable or inventory financing
- Look for small business term loans from credit unions, banks, or online lenders
Some of the other funding options can include inventory financing, merchant cash advances, and purchase order financing.
4. Plan Liquidity
You should plan liquidity by preparing your 13-week cash flow model. Start by updating it on a daily basis.
- Create different scenarios, ranging from best to worst-case
- Keep track of the underlying factors that can create these scenarios
This is going to help you collect faster, build liquidity, identify certain payables, delay contributions, and negotiate better with financers in the pipeline. You should share your efforts and analysis with your lenders, investors, financial sponsors, and key stakeholders.
5. Plan a Recovery Timeline
There are many steps that you will have to take to recover. It is not possible to do everything at once. So it is important to create a timeline that prioritizes the key actions that should be taken. These steps can vary based on your business, but some of the common ones can include:
- Securing funding to continue your business operations
- Re-hiring staff
- Restocking inventory
And lots more.
While you take these steps, it is important to keep track of progress. The goal is to prevent wastage of time and resources on activities that will not generate solid ROI. Invest more on measures such as
6. Revamp Your Business’ Budget
As you plan to return to business after the pandemic, you should be ready to spend money before beginning to generate revenues. This means that you will have to revamp your budget when creating a new plan. These expenses should be allocated in different areas including the following:
- Re-hiring people you laid off
- Hiring and training new staff
- Purchasing inventory
- Changes to the advertising budget
Keeping in mind recovery from the pandemic, you must have a clear idea of what you should budget for and where to cut on costs. The goal should be to drive optimum revenues and eliminate wastage.
7. Take Care of Valuable Assets
Planning for a post-COVID-19 era also requires you to show a greater human side of your business. This requires expressing and showing care and support for your staff. What you do during this phase will be remembered by them for years. You may go a step further and assist your staff in finding programs that may help your organization get through the difficult times.
Your business’ long-term success and value depend on the steps you will be taking now. Your plan should focus on building liquidity to survive and position your business to explore all the opportunities to prosper. It is also recommended to build a contingency plan for the next crisis because you may never know when something unexpected may again appear in the future.
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