Recovering From Tough Financial Times

Recovering From Tough Financial Times

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Recovering From Tough Financial Times

Being a small business owner is a constant challenge. We always have too much or too little of something – money, time, staff, customers, space, product, etc. The recent pandemic has businesses experiencing extremes – full or partial shutdown of physical operations, customers staying at home, events being cancelled and staff staying at home to take care of children. As a result, sales have decreased or vanished while expenses are still there. Our government has attempted to step in and offer options to help us get through this.

That still leaves us with the question – how do we create a new sense of financial security?

Start with your Attitude – develop a sense of confidence that we are capable of overcoming whatever challenges we are given. Keep an open mind and look for options.

Be your best self – go back to basics. Eat right, exercise, sleep and meditate so you can fully utilize your creative self and take action.

Now that you are in the “right place” the objective is to get the business financially sound. Each business runs on cash. Financial survival relies on having more cash coming in than going out.

Assess where you are at. Focus on today. Identify the cash coming in and the cash going out.

  • What cash do you have? Take into account bank loans, savings, accounts receivable, personal resources and projected sales.
  • Review your monthly expenses.
  • List your resources. Consider inventory, staff time, specialized knowledge, etc.

Define where you want to be. First determine your breakeven options. Then go another step forward and shoot for desired net income.

Brainstorm. Get everyone involved.

  • How can you increase sales? Normally there are 3 ways – (1) Sell more to your current customers, (2) increase your prices or (3) sell to new customers. The easiest and fastest is to focus on your current ideal customers. They value what you provide. How can you provide them more value? Next focus on the type of sale that will provide the greatest amount to cover overhead and utilize resources that you have.
  • How to increase cash flow? Can you offer key customers an upfront discount to pay in advance? Change your terms with other customers? Do you have any unused resources such as extra space to rent out, equipment not being used, etc. Keep an open mind on this one. Staff that could be utilized in a different manner.
  • How can you decrease cash going out? Go through last month’s bank account and see where the money was spent. Start with a zero budget and justify every expense that you will keep. For very short-term options work with your vendors to defer payment of expenses that are needed.

Set goals for the next 90 days. Develop clear company goals, aligned with department and staff goals. Fully utilize the time your team has to achieve great things. Think of a relay race – everyone working in sync, heading in the same direction, ready to hand off the baton.

Behind every dark cloud there is a silver lining. Find your silver lining.

By Mary Guldan-Lindstrom, CPA

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