It’s safe to say, we’d all rather be living in coronavirus-free communities right now. Sadly, that’s not anyone’s reality. And from a small business perspective, this is a particularly stressful time. Is simply surviving the goal? Is there a way to dig in and weather the chaos mostly unscathed? Better yet, is it possible to be strategic and come out better once lockdowns are lifted than you were when they began?
As of the release of this article, (the new) boldxchange.com has officially turned one-month-old. What a time to launch an endeavor. Pre-launch and post, we’ve obsessed over what metrics we think are critical to track. The coronavirus outbreak has only made us hyper-aware of our business’ key performance indicators and overall health.
We don’t have money to spread around to those in need, but we do have time to support others and our perspective to share. This is the first in a series of articles we’re writing to help fellow small business owners think critically about what it’ll take to make it through this tough time.
Assess Your Business Reality
This list is not exhaustive, but in our opinion these are critical financial questions every owner must be able to answer during the crisis:
- How much money is in my business bank account or available cash reserves?
- What are my business expenses and how much are they?
- How much am I owed in accounts receivable and how much can I expect to collect in a reasonable amount of time?
- How will the crisis affect my sales projections and how should I adjust them accordingly?
I check Bold Xchange’s Profit and Loss Statement and Quickbooks account at least once per day. Call it paranoia, but at any given time I’m adequately aware of our financial health. Assessing your small business’s reality is step one. With that awareness, you can create a tailored plan to meet your goals and needs to weather current and future challenges.
Lower Expenses
Generating revenue is harder than cutting expenses. We all waste a little money here and there. But now you’ve got more time to reevaluate where you’re spending your business’ money.
Consider how you can be more lean. Does your small business really need that expensive plugin or software? Is there a free version that does enough to get you by? Should you reduce or repurpose your marketing budget? Is that contractor actually helping you generate more revenue or significantly improve your brand?
Shoot for Profitability
In the midst of a pandemic, even businesses that have raised lots of money from investors have to shoot for profitability—or start getting much closer to break even.
Let’s say despite the current chaos, my business does record numbers and I sell $40,000 worth of product or services in April. I’d be ready to celebrate! But before I did, I’d have to figure out if I actually made money from all of those sales.
If my average order was $200 but I paid $250 to get each customer, I lost money. Maybe I didn’t pay so much to get each customer but my shipping costs and other expenses were extremely high. I could’ve still lost money after working hard to increase revenue. Either way, there are underlying business issues.
It’s as if I’m pouring water into a bucket, confused as to why the water level is falling instead of rising. I have a leaky bucket. I need to plug it.
For most, the pandemic and likely recession to follow means recalibrating expectations and preparing to do less business. You may make less money, but you could possibly figure out a way to keep more of it, enough to ensure that your small business will outlast tough times.