Over the last few months, there has been a major shift to remote work and technology adaptations as businesses have been forced to close their doors or change operations due the global pandemic. Not only has this time been mentally taxing for business owners and entrepreneurs, but also stressful when it comes to the financial side of managing a business.
No matter the circumstance, without a consistent flow of money coming in it will be difficult to maintain business as usual, pay employees, and keep up with the bills. As you learn to navigate this new normal and find solutions to further your business during this uncertain time, there are some financial considerations to help keep you protected and moving in the right direction.
1. Prioritize Your Spending
As a business owner, you’ve likely had to reevaluate your finances due to income fluctuations as a result of the pandemic. That being the case, it’s a good idea to streamline and prioritize where you are spending your cash in order to best serve your needs. Areas that should be focused on include your employee’s paychecks, bills and utilities, and any necessary service that keeps your business operational. Consider cutting back on purchasing new inventory, expensive travel, leased equipment, or making new purchases that require long-term payments. At this time, you need to make sure you have the money to support yourself and your employees immediately. Once you have a detailed financial plan and know exactly what allowance you have to spend, you can then allocate that towards the areas you initially cut back spending. It’s important to be detailed and strategic during the coming months to ensure nothing falls through the cracks and you’re able to maintain your financial standing should there be another spike.
2. Prepare for an Uncertain Future
The world is more unpredictable than you might often realize—in the matter of a second, life can change forever. From an economic shutdown, a family illness, or a global pandemic, you begin to realize that nothing is invincible, including your business. With that said, there are ways to prepare for the what-ifs in life and maintain peace of mind knowing your legacy and your loved ones are protected no matter the circumstance. You should consider setting up a life insurance policy to protect the future of your business should something unexpected happen to you. Doing so can ensure that your family is protected, and they’re not faced with a financial burden during a very difficult time. Take some time to review options and inquire about the cost of life insurance in order to determine a policy that is right for your situation.
3. Get Creative to Earn Additional Revenue
Hopefully the pandemic has helped you learn something new about your business and you now realize the importance of being adaptable, strategic, and multifaceted. Oftentimes, a forced change is an opportunity to reevaluate the way things have been done in the past and allows you to determine if that is the most effective way to serve the business and customers. If you’re currently facing some setbacks or feel at a standstill, take a moment to think outside the box. Get a little creative as far as new ways to leverage technology solutions to advertise your products and services during the pandemic. Think about how you can provide value to individuals during this time or ways to make their lives easier.
4. Prioritize Financial Management
Being an organized business owner has many advantages and can set you apart from your competition. By improving your organizational skills, you can think clearly, act as a valuable resource, and set an example for your employees. When it comes to financial management—being organized is key. If you don’t have a clear understanding of your business finances, or someone else is in charge of the bills, it might be a good time to educate yourself. Even if accounting isn’t part of your job as a business owner, you’re still responsible for all the moving parts of your business and therefore need to understand where your money is coming from, and where it’s being spent. This way, during times of crisis you know how to adapt and be conservative if necessary.
5. Determine if You Qualify for Relief Programs
As a small business, don’t forget that you might qualify for relief programs during the pandemic that might help your financial situation. Take some time to look into debt relief programs, small business grants, paycheck protection programs, and other coronavirus relief options that might be helpful during this time. If you do qualify, it might be the difference in keeping someone employed so don’t discount financial aid.
6. Keep Your Business and Personal Finances Separate
Although you might be willing to do anything you can to keep your business operating as normal, sacrificing your time and money may not be in your best interest. It’s very important that you don’t dip into your retirement account, personal savings, or credit. Should you draw money from your personal accounts, or if your business fails, you run the risk of being in serious debt or not having a retirement plan. It’s never a good idea to put your personal finances in danger so make sure you keep your business acquisitions separate from your personal finances. Even amidst challenging times, the same rules apply when it comes to protecting your financial future.
If you are like most business owners and entrepreneurs navigating this pandemic, you might be feeling overwhelmed with the various information, news, and changes happening around the world. Although it’s challenging, it’s important that you focus on things you can control, like getting your finances in gear to set yourself up for a promising future. Getting through this economic crisis will not be an easy task for any small business owner or entrepreneur, however, it will help you grow as a leader and be better equipped to handle adversity in the future.
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