More than 25 million Americans have been out of work as of April 2020 due to the COVID-19 pandemic.
Many organizations have been adversely hit with a good number having to shut their doors. When a business flames out, that only means broken budgets for its former employees and their families. Before you can help your workers, you first need to support the business.
Here’s a look at seven crucial financial advice pieces your business can use to navigate the COVID-19 pandemic and survive.
1. Evaluate Needs and Wants
One of the most significant impacts the COVID-19 pandemic has had on firms is to show them what they want and what they need. With a limited flow of cash (if at all), the first thing you need to do is cut out any non-essential spending. Items like business travel, non-core leases and other capital improvement projects can wait.
Unless the new hires you had planned are mission-critical, you should freeze any further recruitment for now. Along with that, you should also pause on salary bumps and defer any dividend payouts to conserve your funds.
You can take the scalpel even further and cut back on the subscriptions and services your firm doesn’t need at the moment. Comb through your bills and consult companies with integrated payments that you work with to surface any automated expenses you can pause for now.
Quite a number of banks and financial partners are opening discussions into loan and bill deferment. You can approach your financing partners to see if you qualify for this kind of relief.
While such an assessment might seem draconian, it will give your business more runway to weather the current pandemic.
2. Alter Your Hiring
It’s hard to alter how you’re hiring as that has real-world implications on your team. However, if your business doesn’t survive today, there will be no job for them to come back to post-pandemic.
Run a full assessment of all your employees to figure out who is essential and who isn’t. For non-essential employees, you may be forced to consider laying them off to cut back on the payroll.
If you do terminate any employees, don’t leave them to their own devices. Ensure you help them file for unemployment and direct them to other resources that can ease their transition.
For the essential workers you need to keep, there is still the matter of cost to figure out. Suspend your contribution to benefits that can be temporarily withheld, such as gym membership and child care. In line with this, you can also pause paying overtime and bonuses to conserve your cash.
Another vital way to cut staff-related costs is to help them move to remote working. You’ll save on the incidental expenses that come with hosting your employees in the office.
If you still can’t make full payroll, it may be time to chat with your staff about reducing their hours or having them take home reduced pay, which beats unemployment.
However, if you must have this discussion, ensure you’re entirely transparent to get your team’s buy-in.
3. Avoid Panic Selling
Did your business hold other investments before the pandemic hit? You may be tempted to sell your assets and avoid an impending loss. And some of those investments may logically need liquidating.
But by and large, you should resist the temptation to panic sell, especially if your investments have a sound fundamental basis. That’s because sound businesses will remain viable long after the pandemic is over, and you want to retain your interest in such assets.
4. Have a Cash Reserve
All the cost savings you’re making by cutting down shouldn’t go into anything else except an emergency fund.
Since many banks are making business lines of credit more readily available, you can secure one. That not only helps you have cash on hand, but you can access good credit when in a crunch.
5. Invest in Growth Opportunities
Investing in the middle of the COVID-19 pandemic may sound counterintuitive, but it is the second most crucial financial move after cutting down.
When a crisis like the current pandemic hits, investors sell their equity positions out of fear. Businesses with sound fundamentals and which would have never considered hitting the market suddenly come up for sale.
All these opportunities place you in a position to emerge stronger post-pandemic. Thus, as you make cutbacks, you can put some of that money into viable investments. That diversifies your income stream through the pandemic and beyond.
6. Seek Financial Assistance
For businesses in the thick of financial headwinds during the pandemic, financial assistance is now a survival matter.
There are several programs the federal government has in place to give businesses a shot in the arm. Look into which program is most tailored for your firm to secure funding that can keep you and your staff going.
7. Focus on Generating Cash Over Profitability
With the uncertainty flying around due to the pandemic, cash has now become king. As such, your primary objective should be seeking a positive cash flow situation for the foreseeable future.
Many businesses can make a profit without generating cash. If your business is in that category, you need a mental shift to help you stay afloat. Work out a strategy that adapts your profit-generating tactics towards primarily seeking out cash flow to enhance your liquidity.
For example, brick-and-mortar retailers are now getting behind their e-gift cards and heavily marketing them. In a typical business environment, such businesses would zero in on other income-generating activities. But e-gift cards are a useful means to generate cash during these unusual times that keep the business going.
Implement Financial Advice That Can Help You Wade Through the Pandemic
Every business is fighting for its life as the COVID-19 pandemic rages on. Make an effort to seek out sound financial advice on how to conserve your firm’s finances so your business can survive and offer jobs to your employees once the pandemic lets up.
Having a keen financial sense is one skill among many, you need to survive the current crisis. Our website features content offering advice and insights to help you run your business in these challenging times. Check out more of our articles to learn how you can make your business survive and thrive.