As it turns out, COVID-19 has strangled several small businesses in its crib. According to the business.com survey, nearly 100,000 small businesses have shut down because of the pandemic. Almost 16,000 bars and restaurants have permanently closed.
Over time, it has become increasingly plain and clear, that one of the biggest obstacles plaguing businesses, because of the pandemic, is the cash flow. According to a survey published in the Proceedings of the National Academy of Sciences of the U.S., an average company with over $10,000 expenses had only enough cash reserve to survive two weeks without assistance.
Now that the pandemic is here to stay, at least for some time, the big question is: How to survive this crisis in the remaining half of this year?
The answer: Focus on building cash reserves because we never know how long this pandemic is going to last.
And the best way to build your Cash Reserves during COVID-19 crises is by Going Lean
Many small businesses, out of necessity, are trimming down the fat in their budget by spending only on critical requirements. They could also defer payments to landlords, suppliers, and banks without alienating them.
Besides, you can keep running inventory to a minimum and remove all dead stock. And, also, see if you could revise employee incentives and plans.
Additional steps that businesses could integrate as part of their “Going Lean” Strategy:
Many tried and tested free and cheap online software and services are ava ilable in the market that small businesses could leverage effortlessly. If you want to upgrade your free model to a premium model, so as eliminate ads and access additional features even then, it would be easy on your pockets.
Inventory management is the key to the survival of small businesses and more so in the current situation. Having an account of overstock, deadstock, among many other things, has become inordinately critical in this crisis.
Online inventory management software could be updated and accessed remotely, not to mention it makes the switch from a physical storefront to ecommerce frictionless. Several inventory management services could easily merge with other business software, which brings down the operational costs of businesses.
Monitoring employee activity will be a breeze with productivity software. You can also schedule events, ensure quality control, and even project sharing can be done with this software.
If these weren’t enough, it also gives you clear-cut ideas on areas that are most efficient versus those that need streamlining to up their productivity quotient. The software eliminates the need for staff monitoring.
G Suite is a handy example of project management software. Here’s an extensive list of productivity software that you could use to keep track of employee productivity
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Sure, for some offices, it’s imperative to have an onsite server system. However, for many small businesses, an onsite server is just an additional cost considering the expenses made on server maintenance.
The point is: Having a cloud server will help you reduce costs drastically as you don’t have to have a dedicated staff, plus it takes care of scalability issues and updates automatically.
The virus has made remote working the new normal, which means using mobile and web apps more often. Available at little or no cost, employees can make phone and video calls directly from their smart devices using these apps.
If the remote setup is used for a longer time, you could save a few overhead expenses in terms of maintaining the office premises and phone service charges.
Recently several small businesses applied for the U.S. Small Business Administration’s Economic Injury Disaster Loan and the Paycheck Protection Program. I hope you too availed of these services.
However, it would be best if you didn’t stop there. Keep looking out for relief funds offered mainly by local, state, and also federal governments. Even private companies and NGOs are doing their bit to help small businesses. So, if you are entitled to receive these benefits, go for it. Every penny counts during such crises.
If your business was able to pivot and find new revenue-generating streams, it’s better to nurture it. However, if you are still to find a new pathway, then it’s time to take a step back and pause and think.
What could bring your customers back to your business? What needs of theirs that you could fulfill right now? How does it align with your current offerings? If your brand already has a loyal customer base, then surely they’ll stick around with you and your offerings. Only you need to pivot to meet their needs right now.
According to a survey by the Society for Human Resource Management, 43% of the small businesses have pivoted their business models. To that end, companies have been asking employees to support changes in their business.
Also read: Top 3 Lessons I Learned from Growing a $100K+ Business
Several businesses have being forced to work remotely since the onset of the pandemic. And if your businesses haven’t being affected by the shift, then without much ado, make it a permanent policy for your business.
On the other hand, if it is isn’t working for you, find the shortcomings and see if you could make them right. However, one thing is clear, by going remote you could save a lot on your overhead expenses.
COVID-19 has opened a can of worms for business. Among many other things, cash shortages, unpredictable consumer behavior, zero demand for non-essential goods, supply chain disruptions, dead stock, and low footfalls.
On the other side, it has spurred innovation, and companies are tinkering and testing various strategies that’ll not help them survive but thrive during this period. And as I stated above one way to handle this crises without going crazy is to go lean build cash reserves.
How about you? How is business coping during this crisis?
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