From boosting liquidity to avoiding wasteful expenses, these expert-recommended strategies may benefit various businesses that are struggling during the coronavirus pandemic.
The worldwide coronavirus outbreak threatens to disrupt operations for companies large and small for the foreseeable future. In fact, 82% of business leaders recently surveyed by the Young President’s Organization anticipate revenue declines over the next six months. To help stem losses, 95% of chief executives polled are taking action, including canceling major events (64%), nixing business travel (53%), cutting costs (39%), and allowing employees to telecommute (28%).
There’s much you can’t control during uncertain times like these, but you can take steps to protect your business from being financially crippled by COVID-19. While we recognize that there is no one-size-fits-all solution, following are three expert-recommended strategies to consider in helping your business survive the pandemic.
Forecast cash flow and boost liquidity
James Cassel, co-founder and chairman of investment banking firm Cassel Salpeter & Co., said your company’s survival depends on addressing financial/liquidity issues during this crisis.
“Create a 13-week cash flow forecast, which should be stress-tested to explore likely scenarios, including worst-case scenarios,” he said. “Here, you must consider your cash needs looking ahead after thoroughly reviewing fixed and variable expenses.”
Concurrently, seize every opportunity to maximize cash inflow by offering cash reductions to customers and clients who pay more quickly.
“You also want to make what you have last longer. To help, reschedule where you can toward a longer payment period for outstanding expenses. And head to the negotiation table with your vendors, keeping in mind that many of them are facing the same issues you are,” added Cassel.
Lastly, amplify liquidity via extended credit, a second mortgage or a business loan. Small business owners impacted by COVID-19 in many states are now eligible to apply for a U.S. Small Business Administration (SBA) low-interest loan