The COVID-19 pandemic has had a severe impact on the American economy. Before the crisis, unemployment in the United States was at a 50-year low while inflation was also under the Fed’s target. After the pandemic, inflation spiked, and unemployment hit record highs.
But these are just the large-scale effects of the pandemic. Take a closer look, and you’ll see that the virus has also hurt small businesses. More than half of all small businesses that have closed due to COVID-19 have done so permanently.
To spare your small business the same fate, you need to adopt new resources and new strategies. Check out the three things you can do to keep your doors open.
It was already challenging for a small business to secure a loan from traditional lenders before the healthcare crisis hit, as most big banks are risk averse. Today, with the state of the economy in mind, many banks are even more cautious. As a result, they want to see strong cash flow, sizable assets, good sales forecasts, and an impressive credit score before they willing to grant you funds.
But then again, why would you need help from the banks if your small business has all of these things?
If you don’t meet the traditional banks’ criteria for lending, consider seeking a bridge loan from an unconventional online lender that approves applications quickly and deposits needed funds even quicker. Just do your research and read the terms and conditions carefully to avoid predatory debt traps.
In addition, take advantage of local and federal relief packages for your business. The right package could help you pay rent, salaries, and other critical operational expenses.
A Strong Accounts Receivable Ratio
Now more than ever, it’s critical for your business to have a healthy cash flow position in order to survive this uncertain economic climate. For one, your company needs to adopt good invoicing practices to receive payments on time. Incentivize payments with bonuses and penalties and only extend credit to businesses after you complete background checks.
It’s also vital you collect on bills as soon as they go late. If you aren’t sure how to navigate this delicate situation, a commercial debt collection agency can help you recover overdue accounts with ease.
Make sure you partner with an ethical collection agency that stays on the right side of the law to preserve your key relationships and avoid legal issues. A commercial collections team from a renowned firm will have targeted strategies for collecting even during these unusual times, allowing them to recover revenue without ruining your professional reputation.
Modern Business Strategy
In the age of physical distancing, where many businesses close their doors due to shelter-in-place orders, it’s still possible for your company to operate, generate revenue, and even turn a profit with a new business strategy.
Your first step is to embrace remote working, if possible. Studies show that many employees are more productive when they work from home. What’s more, remote working helps you slash operational costs such as rent, utility bills, and more.
On the downside, remote working can also require an investment. For example, you may need to give your essential employees company laptops with corporate VPNs to secure your business from increasing cybersecurity attacks. So, be prepared for these expenses.
Don’t be afraid to take your business in new directions in this new normal. If possible, your business should consider selling products digitally with an upgrade to your online platform, including online payment processing. To improve your market reach, you can take advantage of cost-effective online marketing tools on social media platforms. If you run a motel or a hotel, use your kitchen to start a food delivery service in partnership with food delivery companies like Uber Eats.
Although it’s challenging to survive as a small business in this environment, with the right strategies and professional services, your organization can weather this storm.