As the events surrounding the coronavirus continues to escalate and sows the seeds of fear into the public, small business owners and self-employed individuals may be finding themselves worrying over how it has begun to affect their livelihoods. You see, the virus in itself has served as a catalyst for a number of different events that show signs of a potential recession coming. The stock market has plummeted, public events and celebrations are being cancelled, and the government’s response to contain it has begun restricting trade and travel.
In a best-case scenario, the virus will be contained and a vaccine readied by summer to avoid doing any lasting harm to the economy. But depending on how long it takes for the virus to be contained, businesses could lose several months of profit and be forced to recuperate the losses with layoffs. In a worst-case scenario, it could cause a lot of large businesses to declare bankruptcy and shut their doors, leaving people jobless and afraid to leave their homes, resulting in another recession.
Most small businesses will be forced to close their doors well before a larger business needs to, so we at From Red To Black LLC wanted to address the topic of what can small business owners do to prepare themselves to deal with the situation?
Determine How It Affects Your Business
In order to prepare your business just in case things continue to get worse, it’s important to know just how badly you are already being affected. In some industries this isn’t very hard to notice, especially those in the restaurant and hospitality industry or those that deal with importing from China. But for others it can be easy to overlook because it isn’t obvious until it grows out of control and your business is on the verge of dying.
To this end, the most efficient thing to do would be to run a Sales Report that compares the number of sale transactions your business has undergone over a set period of time. You’ll want to check and see if you have had a decreasing flow of transactions that make up your total sales over the last twelve weeks or so. If there are points where there have been significant dips, check to see if they coincide with current events such as a news broadcast about the virus.
Work To Mitigate The Potential Damage
Once you’ve determined that you are or will be affected by the upcoming shift in the economy, the next step is to mitigate the damage that will happen. The most obvious way would be to begin budgeting by setting aside enough capital, so that even if you lose your clients you’ll have just enough to fall back on and keep your business running. However, we don’t know how long it will take for things to go back to normal, so there is no telling exactly how much you will need to save to get through the troubled times ahead. The best you can do is take an estimated guess and then double it.
Look at your expenses and determine which ones are essential to keep your business afloat. These are the ones you will need to account for no matter what, so you’ll have to build your budget around them. Then focus on reducing the ones that aren’t essential so that the capital you expend towards them can be redistributed towards the budget. It will take some work to determine which you can reduce without negatively impacting your business, so make sure to set aside enough time to review how connected they all are before you start making drastic cuts.
Figure Out How To Take Advantage Of The Situation
Despite the situation growing dire, there is opportunity for small businesses to thrive in these troubled times. Some businesses, such as Janitorial and Cleaning services, receive a surge in their number of clients due to the sudden demand. Others that operate virtually (ourselves included) have the benefits of working remotely and thus aren’t as affected by the restrictions being put into place, meaning we can continue to operate without inconveniencing our clients.
Even if your industry isn’t one that can directly benefit from the panic, you can find ways to come out ahead with a little planning. For example, the current aversion to being in large gatherings or being out in public means that a lot more people will be relying on home delivery services. For someone who owns a small restaurant and a vehicle, offering direct deliveries could be a way to make up for some of the decrease in sales, even if the margin is smaller with the additional costs, and your customers will remember the convenience you offered when things go back to normal.
Look at how the businesses around you are adjusting to the situation and consider what it is that you can do in order to make the most out of the circumstances.
Conclusion
Remember, we at From Red To Black LLC only want to provide small business owners and self-employed individuals with the means of maintaining their business’ financial health so that they can live long and prosper. So we hope that this article has given you a foundation to work off of to get through these troubled times. If you have any questions about what we can do for you, don’t hesitate to Contact Us.
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