Your Small Business and a Financial Emergency: What Should You Do?

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Your Small Business and a Financial Emergency: What Should You Do?

by ICC on October 22, 2020
October 22, 2020 / by / in

If we have learned nothing else from the coronavirus pandemic, it has proven how fragile the economy is and how easily a business can be disrupted to the point of closure and bankruptcy. With thousands of small businesses closing due to prolonged lockdowns and a lack of customers, your business might face the same fate.

What can you do to ensure that you come out on top and that a financial emergency remains a temporary problem without becoming the end of the line?

Keep payments up to date

While you are waiting for money to come in at the end of the month, some accounts might fall due before then. Failing to pay means accrued interest and a black mark against your business’s credit rating. During these challenging economic times, you cannot afford to have this happen.

Chase customers who owe you money and have not yet paid. Some might be struggling to honour their financial commitment. In such cases, renegotiate terms and conditions. 

You might be receiving less money from them each month, but some is better than none. If all else fails, contact Cobra Payday Loans to find out about a short-term loan that helps you stay afloat until you receive outstanding money from clients.

Revisit expenses

Put a revised budget together after trimming all your expenses to the bone. Cut all unnecessary spending and divert that money to other areas, such as salaries. This is a time where tough decisions must be made that might affect other people’s lives. 

You might need to cut down on employees’ hours or make some positions redundant. Naturally, this should be your last resort, but do not delay if you see no other way out. Holding on too long only drains your bank balance further.

Shop around for different suppliers who offer lower prices or better payment terms if you are not bound by contracts with existing ones. Negotiate for extended payment deadlines to help maintain your cash flow while you ride out the storm.

Grow your business

With a contracting market and decreasing funds, it might be challenging to grow your business. However, this is precisely what needs to happen if you are to survive. One area that you should not cut expenses is marketing. 

If possible, allocate more money to this function. Using smart, inexpensive marketing techniques, including social media, you can reach more customers and generate additional sales. 

You might need to hire someone to help with this, such as a freelance digital marketing expert. Their unique understanding of how social media and website marketing works will make this approach worth the money spent.

Use the downtime to develop new business ideas and products or services to launch to supplement existing ones. Look for gaps in the market that you can fill and pursue them aggressively.

Get help

There are resources out there to assist owners in surviving the coronavirus storm. Some tech companies have offered their services and expertise to small businesses for free to help them save money. These include accounting, marketing, software, telecoms, and cybersecurity companies.

The government has set aside funds to provide relief for small business owners negatively impacted by COVID-19. Local businesses can take out loans from high street banks, with interest-free repayments for the first six months. These include term loans, overdraft facilities, and asset-based lending transactions. 

The government guarantees 80% of the loan amount. Companies can apply for a refund on sick pay for an employee with a coronavirus infection of up to 14 days. However, these refunds have overwhelmed authorities and might take a while to process.