Business uncertainty can be triggered by anything from complexities with the banking industry to trade disputes to consumer global events. At the time of my writing, it’s being triggered by global uncertainty around the effects of COVID-19 to individuals and the economy. In most cases, the net result for most smaller businesses is usually the same: impacts to revenue and viability. Over a decade ago, I had two small businesses during a period of market volatility, and I had to look at all my options and make hard choices about what was best for my employees, my customers, and my business as a whole.
Recent turbulence has brought me back to that experience. I can tell you personally that as a business owner, any period when you’re fighting to protect your business can feel like an eternity. With recent events, the added layer of concern around impact to our families and communities can also be creating additional stress and uncertainty. Even with the CARES Act, small businesses that qualify will still need to apply and receive their assistance before they can start leveraging relief funds to help keep their companies afloat.
As a business owner, the advice I wish I had prior to that period would have been to plan ahead, anticipate setbacks, and roll with the punches to stay afloat. But in the middle of uncertainty that wouldn’t have been very helpful. Below are some tips that I think can be of use to small business owners right now.
Prioritize Your Employees
Your customers are your bread and butter, but your employees are your frontline. The CARES Act specifically has provisions for payroll costs, but some businesses have already had to make people cuts and what is defined as a payroll cost in the Act does not cover everything. Make sure the people that you’ve been able to keep on have the resources they need to take care of themselves and your company. I had to get creative with figuring out ways to cover my costs, and it was scary – we small business owners were doing everything we could to keep the lights on, including applying for government backed loans - but taking care of my people as much as I could helped me save my business.
Stay Insured
Look, I’m a General Manager for a company with a business credit division. I will always tell you to pay your bills on time and in full. But if that is not possible due to circumstances out of your control, at the bare minimum make sure that you don’t lapse on your insurance payments. If anything happens that could compromise your business further, you will at least know that you’re insured and won’t have to go out of pocket to cover unexpected expenses related to an accident or disaster.
Be Flexible with How You Accept Payments
By expanding how you accept payments, you can give your customers flexibility with how they’re able to make good on their contracts with you.
Try to Avoid Unnecessary Purchases
If your business is affected, you’ll need any extra flexibility around cash flow you can muster. If you can hold off on making large purchases until you know you’ve weathered the storm, I strongly recommend it. Every business is different, so you’ll have to determine what you need to keep the doors open and what can wait.
Look at Your Supply Chain, Even if It’s Small
You’ve probably already had to find new suppliers or are looking for new ones currently. As some countries start manufacturing and distributing again, it still might be hard to get the materials you need to remain operational. Even though you might be in a pinch, you’ll want to make sure you’re partnering with reliable, viable vendors. You can ask for referrals, references, and even check their business credit profiles.
Planning for the Future
Once we’re collectively on the other side of COVID-19, a lot of business owners will be thinking about how they run their companies post-pandemic. Below are some tips to help safeguard your business against cash flow shortages in the future.
- Establish an emergency fund. This will have to be a long-term play, but it will be essential to have an emergency fund in place for unexpected circumstances. If one of your major suppliers is impacted by unforeseen events, you’ll want to have enough cash saved to make up for losses that could come from a supply chain interruption. While building this fund may seem like an arduous task, especially when you’d rather be investing that money back in your business, it can be well worth it in the long run.
- Don’t put all your eggs in one basket. It might be tempting to maintain status quo when your business has one or two major clients who support your operations, or when all or most of your clients are in the same industry. However, as we’ve seen recently, if anything affected those major clients or that industry, it could cause extreme hardship for your company. Consider diversifying your client portfolio the same way you would your stock portfolio.
- Hire Responsibly - When you hire, make sure you’re hiring responsibly. There are costs associated with minimizing your workforce that you may not have been aware of and letting people go does not immediately translate to money back into the business. This also ties back to prioritizing your employees; you want to make sure you can take care of all the people who take care of your business
- Build and maintain a positive credit history. Business credit can be important during situations that are unexpected, beyond our control, or both. If your company is unable to deliver to your clients and you need to take out a line of credit to assist with loss of income, a strong business credit profile can help. Strong business credit and a good history of making payments on time may help you negotiate or renegotiate terms with your creditors to help avoid late payments or qualify for a loan to keep your company operational.
For now, it can be very helpful to make sure your business information is up to date with Dun & Bradstreet, as that can help organizations that use our data to help make business decisions find your company and proactively get in touch with you. This may end up being particularly important if you plan to apply for relief through the CARES Act, as lenders will be looking to verify that you’re a legitimate business and Dun & Bradstreet is one avenue they can use to assist with that. You can find your business information and update for free here.
Having weathered uncertainty, I can tell you that it is possible to come out stronger on the other side. You will have learned more about your options, your community, and your own resilience. It will be a difficult journey, but it is possible.
To find more tools and information for small businesses from Dun & Bradstreet, please visit our Resources for Small Businesses section.