The slow down in business from the Coronavirus pandemic has had a tremendous impact on cash.
This crisis won’t last forever. As states start to ease stay at home restrictions and allow businesses to reopen, hopefully things will pick back up after a few more weeks in terms of demand and adequate economic activity. But for now, it’s imperative to take whatever steps we can to conserve our cash. Here are three ways small business owner Gene Marks has managed to do just that. He shared his approach in the blog “The Hartford: Small Biz Ahead.”
1. Keep talking to your bank
My company uses a large, multi-national bank. Like many other banks, big and small, mine has been very sympathetic to the plight of its small business customers. The people I’ve spoken to also believe that we will move beyond this crisis in months, not years, and that the economy will indeed bounce back. I’m getting them to re-commit to my credit lines and I’m already asking what’s needed to get more. I’m also discussing potential deferrals of payments or extensions of terms. So far, the response has been encouraging. As I write this, our credit and financial system is sound. And unlike the 2009 recession, capital is still readily available. I’m evaluating all financing and credit resources, while keeping my options open and doing my best to not spend.
2. Keep talking to your vendors and customers
For my vendors who are large companies with more resources to absorb a slowdown, I’m asking for payment extensions. Big companies, like the banks I mentioned above, are also sympathetic to the plight of small businesses and are willing to bend some terms and rules to help see us through this challenge. I’m not pushing my smaller vendors and contractors yet. On the customer side, I’m stepping up our procedures to get our invoices out the door as fast possible. I’ve asked my bookkeeper to stay on top of any slow paying accounts with email and phone reminders. I’m also considering offering discounts for early payments and pushing for credit card payments. Yes, these cost a little more, but the goal here is to get cash in the bank to see my business through this challenge.
3. Do a full financial review
Print a copy of your year to date general ledger. I consider this general ledger to be the diary of my business because it shows every transaction recorded. When things are busy and the economy is strong, like it was just a few weeks ago, I sometimes tend to get careless in my oversight of expenses. Not anymore. I’m going through each account. I’m cancelling unnecessary recurring charges. I’m questioning why we’re spending money. I’m planning on putting some contractors and projects on hold. Again, my intention is to resume as usual once things get back to normal. And again, I really do believe things will get back to normal in a few months. But in the meantime, cash is king and I’m going to be very strict in how I spend for the near term.
This review is something the team at Peak Advisers can help you complete. Give us a call at (303) 801-4772 to get started or use the button below to contact us.
Here is what I’m NOT doing. I’m not laying people off, because unemployment has been tight and when things get back to normal I’m going to need them. I’m also not skimping on sales and marketing investments, because those things – like advertising, website development and customer relationship management software – are the things business people need if demand falls off.
Peak Advisers has partnered with Method:CRM. It’s a robust customer relationship management system built to integrate deeply with QuickBooks. You can check it out with a FREE 30-day trial. Contact us to get started with Method:CRM.