Getting through the COVID-19 crisis in good shape means taking full control of your income and expenses. It also means making any changes necessary to keep your business afloat now so it can thrive in the longer term. Here are six proactive approaches to take to help improve your cash flow.
1.Adapt and diversify
If your business volume is down, how can you adapt your income streams to compensate? Are there any new opportunities you could explore?
For example, many restaurants have pivoted to supplying takeaway meals to bring in at least some revenue. Others have gone further and partnered with couriers to offer home delivery without needing major logistical investment.
Can you follow suit and offer your products through a new delivery method, or target them to a different kind of customer? Could you leverage your industry expertise to provide services or advice alongside your current physical offerings?
Maybe you could market over a new channel such as social media, helping you to reach new customers with new needs. But whatever changes you make, the most agile businesses will find their cash flow stays in better shape than those who stand still.
2. Draw up an emergency budget
Now’s the time to draw up an emergency budget if you haven’t already done so. Set up a spreadsheet detailing projected income and expenses for the next three months. Cut back expenses wherever you can, for example by cutting discretionary spending or deferring non-core investment.
Once you’ve set up your plan, review and update it weekly so you always know exactly where you stand.
3. Review prices
Unless you trade aggressively on price, there’s usually room for small increases on at least some of your products. Look for ways to drive revenue up a notch without alienating your customers, as even small price increases can have a large cumulative effect on the bottom line.
4. Optimize debt
If you have any high-interest credit cards or other revolving business debts, consider applying for a line of credit and use the funds to clear your most expensive debt. Also consider using a low-cost line of credit facility to convert leased equipment into purchased, to save on monthly bills.
5. Streamline merchant services
How much are you paying for your merchant services? Could you find a less expensive alternative, or could you request a fee reduction from your current provider? In these uncertain times, banks and other financial service providers will often be more sympathetic than you might imagine.
6. Review business banking
On a more general finance level, is your business banking situation right for you? Are you paying for features you don’t need, or are the charges no longer sustainable? A full review with a business banking advisor could make a significant difference to your ongoing costs.
In good times, businesses can often thrive even if they’re not perfectly streamlined. But in an all-consuming crisis like COVID-19 keeping on top of cash flow is vital, helping to put your business in a good place to capitalize on the upcoming recovery.