Small Businesses and the Post-COVID World

As more and more states begin to reopen their businesses, we have seen many small companies make an effort to return to the business they had before coronavirus rocked our economy.  Small businesses should start to prepare their business for optimal operation now.  What steps can you be taking to get your business ready for reopening?

Unfortunately, during times like these, small businesses need to prepare for the worst. If you understand where your business stands and the impact coronavirus will have on your operations, you will be well-equipped to plan for the future.

Those with pent-up demand — beauty, wellness, and other non-essential businesses — will likely have a shorter recovery runway of around 3 months with a V-shaped recovery curve. Businesses like retail, restaurants, and movie theaters may have a longer recovery period of around 6 months. The businesses with the longest recovery period will likely be hospitality, travel, and tourism. 

One of the major things to consider is how much cash flow you have available, as small businesses’ daily cash flow is the source of life. How can you increase your cash flow and optimize your business operations during a time like this?

Start by cutting out any non-essential expenses. Next, avoid making new hires, if possible, and limit large investments and financial commitments. List out your top expenses and set money aside based on when the payments are due.

Once you have assessed your regular expenses, take a look at your fixed and variable expenses. Fixed costs typically are not as flexible as variable, but you can still see where you may be able to reduce them by even 10-20% or defer for a few months. Variable costs should be limited down 80%. 

After the lockdown is lifted, we will likely see an even more stressful period for small business owners. Suppliers, vendors, landlords, and banks could potentially demand their money immediately. As a small business, you must be prepared for this shock and work to negotiate new terms now before it is too late.

Here are a few business strategies to start thinking about now, before the economy reopens and returns back to normal:

First, take a look at your talent. Create a balance between layoffs, terminations, and furloughs. Continuously work to reorganize the structure of your business to build the most effective team. Set objectives for remote working, and ensure your workforce is being as productive as possible. Most importantly, be transparent with your workforce, inform them of salary cuts, no incentives, and soft payouts.

Next, consider where you can find additional revenue streams. Use sales and marketing to your advantage and be creative with how you create revenue. You can add new products, offer delivery services if you are a restaurant, or sell online learning opportunities.

Lastly, consider your goals for the next quarter. Your goals from the beginning of the year are likely not feasible anymore. Reconsider where you can succeed and how that is going to happen. One way to plan for the future is cash flow forecasting. At TGG, we created a Cash Flow Forecaster to help you consider all potential future scenarios for your business.

Contact us for more information on how to plan ahead for your company’s success. 

Monthly Accounting Insights

Right in your inbox

SAN DIEGO

6162 Nancy Ridge Drive
Suite 100
San Diego, CA 92121
760-388-0993

info@tgg-accounting.com

IRVINE

17872 Gillette Avenue
Suite 315
Irvine, CA 92614
949.356.6157

DENVER

383 Corona Street
Suite 103
Denver, CO 80218
720.370.3294

© Copyright – TGG Accounting | TGG Accounting is not certified by the California Board of Accountancy to perform public accounting. Therefore, we do not provide tax return preparation, audits or CPA reviewed or compiled statements.

CONNECT WITH US