Managing Your Small Business Cash Flow During COVID-19

For small business owners, any small emergency can quickly balloon into a crisis when it comes to cash flow. This is exactly the reality that is facing local brands across the nation as the COVID-19 pandemic continues its path around the world. While large corporations are able to continue paying their employees or footing the cost from work-from-home equipment, business owners are facing the reality that they must close their doors, at least until the quarantines end. 

In times like these, it’s easy to feed into your own anxieties about what the future of your business looks like. Some business owners are only a few bad days from permanently closing up shop. Others know that they can withstand a short break but are scared of what a longer quarantine would look like for their future. 

At this juncture, the most important move you can make for your business is managing your cash flow. Whether you’ve had to cease operations already or you’re bracing for the revenue hit that will likely come on the coattails of a temporary economic recession, managing your costs now is critical. 

Take the Time to Update All Financial Documents

With talk of relief for small business owners already coming from DC, it’s a good time to make sure that your financials are in order. Accurate accounting and records will likely come in handy when applying for relief. It’s also good to have on hand, so you can make evidence-based decisions as the situation continues to evolve. 

Get a Holistic Picture of Where Your Cash Goes

Evaluate every penny that you spend. Whether it’s payroll or paying for Sunday morning donuts, you need to have an accurate, complete picture of where your cash goes. It’s most likely that your largest costs won’t be decreased, as these are often things like your rent, utilities, and employee paychecks. But, you might be surprised how much you’re spending on non-essentials. 

Cut Non-Essential Costs Immediately

If you’re planning on staying open, you need to make some rapid changes to your contingency plan. Start by nixing any equipment, inventory, or services that you regularly order. Take a careful look at what exactly it is you need to get by for now, and use the leftover cash to help mitigate other expenses later. There’s no way to accurately predict when the situation is going to get better, but the longer you can pay your bills, the more money you’re going to feed back into your coffers. 

Consider Making a Move to Digital Sales

Online sales are HUGE right now. E-commerce is keeping the world well-stocked (in everything except for toilet paper…) while folks are being asked to stay indoors unless it’s absolutely essential. It’s so big right now, in fact, that Amazon recently had to hire 100,000 new employees just to keep the infrastructure of their business running.  If you’ve been flirting with the idea of making the move to digital sales, it might be time to pull the trigger. While easier said than done, the faster you get your online shop up and running, the faster you can increase your cash flow. 

Stay in Touch with Key Stakeholders

If you have investors, employees, or community members who depend on you, rest assured that you are not the only one concerned about the fate of your business. Your best bet for making a comeback is being transparent with your situation to your stakeholders. This is a time when people are coming together to help each other out. There are movements encouraging people to buy gift certificates from small business owners to help them pay the bills. Your community very likely wants you to come out on the other side of this with your business still intact, and there’s a chance they’re willing to grant you some grace in the meantime. 

While managing cash flow is the key to keeping your doors open, managing your stress is the key to keeping yourself safe and healthy. Don’t make rash decisions, even if it feels like the situation is getting more dire. Tenacity and spirit are going to serve you well as we weather this storm.