The uncertainty wrought by the pandemic has affected people from all walks of life. In the winter of 2019-20, the outbreak of the novel coronavirus COVID-19, and the ensuing measures implemented in the hopes of curbing the spread of the potentially deadly virus, changed the way people live and how companies do business.
Some companies have thrived during the pandemic, while others have faced unprecedented challenges. Many small businesses have been hit especially hard since the pandemic began, prompting many small business owners to express concerns about their long-term viability. A recent MetLife & U.S. Chamber of Commerce Small Business Coronavirus Impact Poll found that 70 percent of small business owners are concerned about financial hardship due to prolonged closures, while 58 percent worry that they will have to permanently close their businesses as a result of the pandemic.
Few people, if anyone, likely saw the pandemic coming, which is perhaps why the resulting financial uncertainty has proven so difficult to comprehend. As the months go by and COVID-19 case numbers again being to increase all over the globe, small business owners are understandably concerned by the potential implementation of additional lockdown measures to stop the spread of the virus.
However, there are steps small businesses can take so they’re ready for any additional financial uncertainties that arrive in both the near and distant future.
• Build cash reserves. Cash on hand can help small business owners in much the same way that sizable savings accounts can help laid off workers overcome a sudden loss of income. Forced closures hurt many small businesses because their bills still came due even if government officials deemed them “nonessential” and forced them to close. Rent was still due each month and, in many instances, contracts signed prior to the pandemic still had to be honored, even if companies were no longer generating revenue. Many small businesses operate on slim margins that make it hard to save while still improving the business. But small business owners who make concerted efforts to build their cash reserves without compromising their offerings should be in better position to withstand financial uncertainty in the years to come.
• Watch inventories carefully. The Small Business Administration recommends that small business owners keep watchful eyes on their inventories. The goal in doing so is to ensure you can continue to meet sales needs without ending up with a stockpile of leftover merchandise that’s difficult to move if or when retail sales slump. Stocking up on more than you need to meet sales needs can eat up cash that you can otherwise use to build your reserves.
• Reduce rented space if possible. One potential positive that may come from the pandemic is that many workers and businesses deftly handled the transition from in-office working to remote working. Small businesses that successfully made that transition can safeguard themselves against future uncertainty by reducing their office space. Small business owners can renegotiate existing leases to allow for subleasing or simply move into smaller offices when existing leases expire. Money saved on office rentals can be redirected to help businesses grow their cash reserves.
Effective planning can help small business owners weather financial storms that can arise unexpectedly.