As we continue to weather the unpredictable storm that is Covid-19, it’s clear that small businesses are being negatively impacted. Due to government mandates and social distancing measures, many small businesses have been forced to close their doors for the foreseeable future. With a spirit of uncertainty instilled across the globe, business owners are among the many who have had to muster up the necessary strength to navigate the challenging times that lie ahead. While lawmakers are taking some immediate steps to provide relief, there are a few actions that small business owners can take to mitigate their losses and protect their financial security amid the Covid-19 outbreak. Here are six tips small business owners can use to ease the worry.
Six Key Steps for Businesses to Weather the Economic Storm
1. Get Your Finances in Order
It’s no surprise that small business owners are feeling an economic crunch as millions of people are ordered to stay home and avoid public gatherings. This has caused a massive disruption to small businesses’ income streams, funding sources, and typical business operations that generate cash flow. To keep afloat during a time when consumer spending has drastically decreased, small business owners are readily preparing themselves by getting a solid grasp on their financial situation.
If you don’t have one already, now is the time to develop a business continuity plan. You will want to clearly define your future expenses and what surplus you have available in your reserves. You may even find it useful to utilize the Business Model Canvas to organize your numbers and each aspect of your business. The Wyoming business council recommends checking with your local bank to see how they can help you deal with any financial obstacles that arise. With an unpredictable future looming on the horizon, it’s best to be vigilant with your numbers.
2. Spend Wisely and Carefully
As business owners deal with the economic fallout associated with Covid-19, it’s more crucial than ever that they try their best to reduce spending and prioritize the necessities. That means making the tough decision to cut back on nonessential and discretionary spending. Financial coach Monee Cheney says that the first step in preparing for a loss of income is to itemize your monthly expenses. From there you can determine what expenses can be cut or eliminated – like eating out, club memberships, and cable. You can repurpose that money by putting it towards an emergency fund in the event that you are without income for several months. Concentrate solely on what you need to keep your business running. It won’t be an easy task, but it will better prepare you for the long-run.
3. Consider Loan Resources
The U.S. Small Business Administration is currently offering disaster loans in an attempt to alleviate the financial burden on small businesses. The SBA states, “The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19).” This serves as an economic lifeline to small business owners that are struggling to stay afloat.
The SBA is also working to ensure that their website is constantly updated with new information regarding small business guidance and loan resources. With the severity of this crisis, it might be in the best interest of your business to take out a small business administration loan. You can apply online or by mail once the governor of your state submits a declaration of emergency. However, keep in mind that any loan you take out will have to be paid back. But don’t be afraid to check-in with your local chamber of commerce to see what loans, grants, and other resources they are offering for affected businesses.
4. Stay Up to Date with the Latest Information
Small business owners have many questions right now that demand answers. If you’re a small business owner, you want to readily prepare yourself by being up to date with the new funding opportunities and policy developments. Now I’m not saying to give in to the temptation to stream the news 24/7 and become completely fear-induced. But with new developments happening hour by hour, equipping yourself with the facts is important.
There have been several measures passed already to help small businesses such as the Families First Coronavirus Response Act which includes employer tax breaks. The U.S. Chamber of Commer has compiled a help guide that provides up to date information on available resources. It may prove helpful to reach out to your credit card company to see if they offer waived fees and payments during this time. As Congress continues to work on further relief packages, it is my and many others’ hope that these new measures will help small businesses return to their prior standings soon.
5. Don’t Let Fear Control You
If you let fear get the best of you, you may be inclined to make rash decisions out of sheer panic. In terms of retirement accounts, it can be tempting to divest. Expert strongly advise against touching retirements account during volatile periods in the market because it can result in a heavy tax penalties and greater financial loss. The good news is, markets tend to enter a strong recovery period after major downfalls.
Alicia Nieves of the Denver7 News reports, “Historically, the market always rebounds. In 2008, it took five years, and in 2015 the market bounced back in about 13 months. Stammer pointed out, even with major downswings, over time, those who stay invested still see an annual eight to nine percent return on average.” The best thing you can do right now is refrain from touching your accounts. If your nearing retirement, you may want to seek advice from a trusted financial advisor. If you feel inclined to do something, put your emotions aside and spend some time becoming more familiar with your retirement plan. Continue to “stay the course” and wait out the market.
6. Engage Your Local Community
A crisis like this requires all hands on deck, so don’t be afraid to ask for help. I have noticed that a beautiful thing emerges during times of crisis – the spirit of helpfulness. If you’re a small business owner who has been diligently serving your community over the years, why not lean on your loyal customers for support? If you feel comfortable, encourage your community to order online, purchase a gift card, or even get creative and compose a product raffle to give to a lucky winner in the future. People often fear the act of reaching out but end up pleasantly surprised with their communities willingness to help. Above all, don’t suffer in silence. Lean on a family member, friend, or coworker for support. Partner with local organizations and alliances and share ideas. Utilize the resources available to you and most importantly, don’t give up hope for the future!
As a thriving part of our national economy, I trust that lawmakers will provide small businesses with the resources they need to bounce back stronger, faster, and more resilient than ever. Philippians 1:6 reads, “Being confident of this, that he who began a good work in you will carry it on to completion until the day of Christ Jesus.” God did not instill in us a spirit of fear, but rather of power, love, and discipline. Remember that as you head forward and steer strong through arising challenges. If you would like to stay up to date with the latest WealthBuilders blogs, vlogs, and events, please subscribe to our email list below.