The spread of COVID-19 created financial disruption around the world, leaving many small business owners struggling. As of March 30, in the early stages of the crisis, 92 percent of small businesses claimed to have had adverse effects due to the pandemic, according to the National Federation of Independent Business (NFIB). Just 5 percent of small businesses said they had no impact whatsoever.
While it is only natural to expect a robust market future after the COVID-19 lockdown, it is not an impossible situation to solve, as others assume when challenging and rough. The lockdown has helped us learn significant business lessons that can help us survive and prosper and prepare us well for any potential crisis.
Evaluate the Financial Damage
The first step in creating a rehabilitation plan for COVID-19 is to assess the extent of the effects on your small company.
Various layers are involved, starting with the hard numbers. Recently it’s beneficial if you haven’t revised your financial statements — like profit and loss or cash flow statements. Then you can compare it to last year’s figures and see how small your company may be.
In addition to the tough figures for sales, profits, and cash flow, consider other ways that your business has been affected. For instance, you would have to incorporate this into your restructuring plan if you were to lay off your employees.
If you have cut your budget for ads and promotions or some of your clients have switched to rivals, you may need to compensate for that when you need financial capital to recover.
Re-evaluate existing business plan
It is necessary to re-evaluate the business plans you made in the pre-COVID periods, based on the financial evaluation, risks, and turnaround strategy. When evaluating the current situation, one has to redefine corporate strategy and prepare a more practical and detailed growth strategy that can be implemented immediately. All actors – senior employees, senior staff, and external investors – must be involved at this stage and reach a mutually agreed set of new targets. Based on the company’s current financial situation, it can take monthly, quarterly, or annual growth strategies that involve funding postponements. You can also boost PE investment or even new collaborations / commercial partnerships that can help achieve renewed business objectives.
Open up New Sales Channels
Many companies can learn from the significant shutdowns caused by corona viruses that multiple distribution channels are fundamentally important. Non-essential businesses with just one distribution platform suffer, such as consumers arriving in a brick and mortar store. With quarantines and lockdowns in force for weeks and months, those companies with few channels have little or no revenue in some areas across the country.
Carry on with effective lead management
With far too much unpredictability and cautiousness due to the virus, it might seem reasonable to give up existing lead succumbing to the investment commitment you’d need. For specific sectors, this may be important, but not necessarily, if you work for it. While individuals cancel holidays and airlines cancel flights, businesses still retain their usual services for now.
If you have significant pipeline leads, continue to feed them. Fix the current situation and increasing the effort required to catch these leads. You show the adaptability and importance of your business by showing how your company handles the current situation.
Revamp Your Budget to Account for New Spending
You can have to invest money from the COVID-19 pandemic before you can make profits.
For instance, you may need to spend money on recruiting and training new staff or rehire new staff. You will need to purchase an inventory, and you may need to update your advertisement budget to create a new mood in the market.
As part of your coronavirus recovery, you need a good picture of what you have to budget for and what you can cut to increase your profits. The aim is to reduce discretionary waste and lean your operating budget as much as possible so that you can take advantage of the opportunity to invest in growth.
One extreme step you might take is to postpone paying yourself a wage or cutting your salary. Whether it makes sense depends on how well you can manage your financial obligations depending on your savings or the income of a spouse if you are married. But it could allow the company to get back on track more quickly if you miss paychecks in the immediate future.
While following the strategy mentioned above, take note of the lessons learned from the recent crisis and draw an effective crisis management plan that takes immediate and long-term impact. Thus, a robust digital and technological ecosystem that can ensure minimum damage to productivity must be in place by creating a financial backup and reservoir of funding. Although most companies are prepared for internal crises such as fire, theft, etc., even if they have insurance scheme preliminary steps, they need an excellent business recovery plan. It is crucial to bear in mind the average days of loss of jobs, income effects, liabilities and outstanding activities.