Although the recent news about the coronavirus vaccine is more than welcome, we are far from done with the COVID-19 pandemic. Because of this, it's important for business owners to continue to strategically manage cash flow during the pandemic. At the MB Group, we've outlined a few key strategic steps you can take to improve the management of your cash flow during COVID-19. Continue reading to learn more and don't hesitate to reach out to our team for assistance in managing cash flow during COVID-19.
Reduce Your Costs
When it comes to managing your cash flow during the COVID-19, one of the first and most important steps you can take is to reduce your costs as much as possible. To get started, you should define and list out all of your fixed and variable costs. In most instances, it's much easier to reduce variable costs than it is fixed costs. But it doesn't hurt to try to negotiate your fixed costs.
For example, you can always have a real conversation with your landlord or speak to lenders to see if favorable terms may exist that can help. On the other hand, your variable costs are usually easier to negotiate. For instance:
- Is it possible to reduce sales personnel's commission with an alternative incentivization method?
- Are there less expensive ways to ship your products?
- Can you reduce your marketing budget?
If there is ever a time to run a lean business, now is maybe the time. Take a look at all of your costs and scrutinize ways to lower or get rid of as much as possible. And, by partnering with the experienced team of CPAs at the MB Group, you'll immediately gain access to industry best practices by similar business owners. Investing in this relationship can pay for itself, especially during challenging times.
Research Alternative Financing Solution
While most businesses are experiencing a cash crunch, there are a range of sources of funding that can help keep your doors open.
Look for Grants
Between grants offered by companies like Google and Facebook, emergency funding offered by the CARES Act, or donation-driven funds at your local level, there are several different sources of cash.
Using a loan or line of credit to infuse cash into your business may seem extreme, but it could be the difference between preserving your strong foundation or having to totally rebuild at a later date.
Turn to Local and National Organizations
You can look through the Small Business Administration's catalog of resources as well as Inc.'s list of grant options and small business loans to see what your business could qualify for. Another option is to stay connected to your local government to learn about programs and initiatives that may have launched to support small businesses.
Work with an Experienced Accountant
You should also reach out to your accountant for more tailored solutions based on your industry and sector that you may be unaware of.
Make Generating Cash & Positive Cash Flow a Priority
Under normal circumstances, turning a profit is everything. But under today's circumstances, positive cash flow takes precedent. And profit doesn't always equal positive cash flow. Because of this, you should strategically re-shift your focus from generating a profit to generating positive cash flow. A few ways you may be able to generate positive cash flow are listed below.
Offer Discounts to Existing Customers
You are well aware that acquiring a new customer is much more expensive than deepening relationships and generating sales from existing or prior customers. And offering the right discount at the right time to existing or previous customers can generate cash, boost sales, and promote customer loyalty. You can amplify your efforts by providing an exclusive "compelling" message.
Strategically Pivot Your Product Lineup to Today
If possible, look to pivot your offerings to the needs of your customers today. One excellent example of this has been the vast number of retailers and businesses that are now offering different types of personal protective equipment. Whether it's custom face masks or luxury hand sanitizers, providing something your customers need today could be the difference that keeps your business afloat.
Repackage Your Services or Products for Consumers
If your business was exclusively B2B, you may be able to generate positive cash flow by repurposing your products for the consumer market. For instance, a company that provided corporate catering events can successfully pivot to cooking and delivering affordable and healthy meals to homes.
Contact MB Group for Help Managing Cash Flow During COVID-19 Pandemic
Whether the COVID-19 pandemic is your first rodeo or you have faced similar economic uncertainty before, it makes dollars and sense to partner with the team of experienced CPAs and accountants at the MB Group. We'll work closely with you to help you successfully manage your cash flow throughout the pandemic.
Contact us today to learn more about how we can help.