Due to the economy being shut down in order to slow down the spread of Covid-19, unemployment is high.
Many small businesses are struggling to find ways to survive the crisis. The concerns are genuine.
How does a business operate when customers refuse to come in to a place of business? Cash flow and sales are at all-time lows for many companies.
Here are some simple tips for businesses to survive the downtown.
Evolve– Be open minded to make changes in how you do business. You never delivered items to customers doors? You never had a website? Now is the time to adapt to demand and evolve as the economy changes.
Evolve does not always me adding new services, it could be as simple as cutting office space rented due to workers working form home which could save money.
Track Cost– Look through your monthly expenses to find any unnecessary expenses that can be cut.
Software subscriptions, utilities, Third-Party service providers such as cleaning and landscaping should all be inspected as some may not be required as often.
Any savings that can be cut can increase the longevity of a business.
Increase Cash Flow- How do you increase cash flow when your sales are constantly dropping off? Look at your accounts receivables as many small business have past due customers on the books.
Bring in a collection agency that can assist you in recovering some of the money owed by the customers who have fallen behind on payment.
Hopefully these tips above will help you think about some possibilities to save money or increase cash flow to help your business survive.
Business success is also tied into personal finance success!
Here are some important financial success tips to follow during the Covid-19 downturn.
Identify your priorities
The first step in any personal finance conversation is to identify your goals and your parameters. If, for example, you are already in the midst of your retirement, you may take a different approach than if you’re planning to retire in 30 years.
Is your goal to continue to grow your portfolio aggressively over the course of several decades? Or to limit volatility over the coming months?
What is your risk tolerance?
How much money will you need in retirement? And when?
These answers will start to establish a framework for your financial planning.
Your own personal financial goals should determine both your contribution rates and your asset allocation.
Start or maintain an emergency fund
An emergency fund can help cover an unexpected expense or help keep you afloat if you suffer a job loss. But having cash reserves also helps to protect your investments.
The worst thing you can do during a down market is to panic sell while the market is very low. This will lock in your losses and prevent you from riding the “rollercoaster” back up to the highs.
The closer you get to retirement, the larger cash reserves you will need. If the market drops significantly, you don’t want to be forced to continue to draw on your portfolio to cover your expenses. Instead, you want to rely on your cash reserves to protect your investments.
If you don’t yet have an emergency fund or cash reserves but you are currently employed, you should start your fund as soon as possible.
Don’t stop investing
If you are currently generating an income, now can be an opportune time to continue to invest.
If the market is down, you are in effect getting a discount on the shares you purchase compared to the prices just a few months ago.
Remember, preparing for retirement is a long-term game. Continue to invest consistently over time so that you can benefit from the eventual market recovery.
Make a game plan for the future
How do you feel now in the midst of this recession? If you feel scared or unprepared, what can you do now to be in a stronger position for a possible future recession?
It may be a matter of saving money, or it may be a need for education.
If you haven’t yet, make it a point to become an informed advocate for your own financial well-being. Consider reading books or blogs or listening to podcasts so that you can be confident in your financial decision-making.
If you’re just getting started, I recommend Your Money or Your Life, The Total Money Makeover, The Intelligent Investor, and A Random Walk Down Wall Street.
You don’t have to be a victim to the whims of the market. You can feel empowered and in control of your financial life and your future.