The Covid-19 pandemic is putting small businesses around the world to the test, from nail salons to grocers; to restaurants all these types of businesses are facing an existential threat. Couple of months of what experts compared to a power blackout has nearly halved economic activity.
To ascertain a proper understanding let’s consider the dictator business market of the US where one additional month could lead to the permanent loss of one fourth of all US business establishments, equaling $4trillion in revenue. For New York City the independent budget office estimates that the virus could cause the city nearly $10billion in lost tax revenue.
This can be catastrophic for the cities, affecting the entire world’s small businesses who are the main drivers of employment, innovation and growth. Keeping all of this in mind, we have seen essential businesses stay open when most cant.
Keeping your doors open during a pandemic is anything but straightforward and if you are something like a starting android game development company it can get really difficult to wrap your head around the situation. Here are some tips to consider for small business who are trying to stay relevant during this pandemic:
Don’t Panic, Pause and Evaluate:
At this point you have to ensure that you take considered and measured decisions about changes that are affecting your business. While Covid-19 is the single biggest shock to the economy business survival depends on considered measured judgments.
Ensure you have all the support that you need, speak to your advisors and other industry members to take stock of your situation and seek independent advice.
Know Your Current Situation:
You need to understand the effect of the coronavirus crisis on your business and in particular what does the situation translate about your business revenue prospects. The governments around the world are firing bazookas at businesses to try and prop them up and this means that there is a lot on offer.
Whether its tax relief, apprentice support or actual cash payments you and your business are likely to be entitled something. So, it becomes important you do the research and evaluate your official survival options.
Furthermore, banks are offering significant repayment holidays; you need to find out whether your business qualifies and if it does get that support before it is not on offer anymore. Lastly, it is quite likely that you are going to need to tip money into your own business to prop it up during this time, if you are taking this route take it after consulting your advisors.
Formulate an Employee Strategy:
Your conversations with your staff are going to be the hardest yet the most important through this time. But none the less communication is important at this point, the fear and stigma attached to this pandemic would have got your employees on the back foot. To need your employees more than ever these days, so be true, be clear about your business goals and formulate an effective strategy that flawlessly disseminates information.
Identify your key employees, these is the staff that you need to survive the crisis but more importantly these are the one you need if you are going to bring your business out of this on the other side. Know what you can and can’t do, there is a lot of information that will update you on your rights that will help you operate in this time.
In some instances you may have to stand down staff without pay depending on your circumstances, when taking such a step it is essential to be absolutely clear about your intent.
Prepare an Urgent Cash flow:
Your business at this point will be going through a critical transitional phase you need to understand what your cash flow position is at the start of this period and what the impact on your cash flow will be for the next couple of months.
For this you need to gain a strong understanding and a strong feel for the cash receipts your business is likely to receive as well as the commitments that you have made to your employees and your suppliers. At the end of it you need to consider the cash that you will have at the end of this transition phase.
Brainstorm Your Options:
Constantly communicate with your advisors and your industry peers about the realistic options available to you. These are likely not the options that will replace revenue but may provide some new source of revenue and customers that will cushion from the impact of revenue losses.
This may also help you to identify costs that are embedded in your business that you may either be able to reduce or at least differ.
Make Decisions and Take Action:
Taking action during this critical phase is going to be one of the toughest parts that you will have to endure. Critically and commercially analyzing the future prospects for your business is going to be really important.
Drastically resizing your business or closing your business or even going into hibernation are all options that you need to put on the table. Managing working capital and the working capital load that your cash flow can sustain is going to be equally as essential.
You also need to understand your supply chain and the commitments you are able to make now to help your business maintain its core as well as ensure that your business can trade post-pandemic.
Negotiate Hard on Your Expenses:
If your revenues drop during this time which it almost certainly has, now is the time to negotiate hard on your expenses. You are likely to be able to suspend payments to your lenders for six months, in relation to your rent speak to your landlord and in relation to your debts speak to your creditors.
All negotiated outcomes need to be on the table, for rent consider rent free periods, for debts you can consider installment plans or debt waivers.
Whatever you do, if you reach a deal on any of your debts make sure that everything is documented and this can be as straightforward as an email exchange.