Businesses Response to a Global Pandemic

#COVID19

Businesses with a financial cushion and those without have been brought to their knees because of the uncertainty.

Non-essential businesses: How long will my business be non-operational? After becoming operational, what will business be like?

Essential businesses: How long will the uncertainty linger? Sales are not like they were pre-Covid19 and even though I am an essential business, things are still rough.

Things are getting real, and very quickly. Businesses were able to part ways with maybe one to two week‘s salaries. However, generating no income and managing these fixed expenses is challenging. Generating minimal income and managing these expenses are presenting even more of a challenge because in some cases the sales are still not enough to cover the expenses or currently they are enough to simply get by in the short-term.

There are financial solutions out there but some businesses will not meet the qualifications to receive adequate funding.

So what do you do?

PRIORITISE

1. Identify your top business obligations or needs presently.
   

2. Develop a high level financial plan for at least the next six months. Create a list of all of your business expenses that you must maintain. Some examples are A. Rent B. Utilities C. Payroll (for some) Eliminate those expenses that are unnecessary at this time. You may ask what are unnecessary expenses. For example, does your business need cable and internet? If you have an alarm or otherwise, your business may require this. Otherwise, it is something to possibly eliminate. For those businesses using marketing, do you need the same level of marketing as when you were in the full swing of things? Even if you do not eliminate it, it may be useful to reduce it given the current economic state. Be mindful that this depends on your business and further your overall business model. Thank you to some of the financial institutions that have deferred loan payments, at a minimum of three months! This has represented great relief for many. The unfortunate reality is that layoffs are inevitable because the business does not have the capacity or funds to pay salaries. On the receiving end of this, it is truly hard but a company cannot pay out what it does not have.
   

3. Evaluate whether you can afford to cover these expenses without spreading the business really thin. You may ask, how do I evaluate whether or not the business can cover these expenses? If you do not expect to generate income within the next three months and #2 will deplete your savings by half or more, you may be spreading yourself thin. Based on the above, you also need to consider the timeframe by which you were able to accumulate this reserve. You can estimate how long it will take you to accumulate again once things do turn around but also considering factors like the customers' need for the service or good you are providing and realistically estimating the anticipated traffic. If you are an essential business currently and operations are still resulting in you tapping into savings or otherwise, you need to consider how long you will be able to keep this up and still have some level of flexibility.
   

4. Identify someone that you trust who would be willing and able to assist you.
   

5. Do not give up hope. As a business owner, you have encountered challenges before.Think about those times and what was required. Use those experiences because wisdom is necessary in this process and you have come too far to give up now.
   

For those who meet the qualifications for external debt, and you want to ensure that you have a Plan B, apply just in case to ensure that if you do deplete your reserve that you have something to fall back on. I do not recommend taking on external debt during this time but it may be your only option given your present circumstances. Let this be your last resort.

Please ensure that you do not become so focused on the amount that you can receive that you do not consider what your payments will be. Ensure that you have assessed your financial situation (past, current, and future) and have concluded that you can afford to make the required payments once your business is back in full swing.

Borrow only what you can afford!

Operating cash flow is a serious thing and it is pointless to take on additional debt now that you cannot afford to pay once you are back in business!

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