When the COVID-19 pandemic first arrived, consumers and businesses alike shifted into survival mode, doing everything possible to cut spending and navigate a high level of uncertainty. In many cases, this meant falling back on savings and cutting expenses, illustrating the very reason why it’s so important to save for a rainy day.
It poured heavily during the last year. Now that the flood waters have had some time to recede while we adjusted to a new normal, it’s time to start thinking about how you can maintain financial wellness in your business moving forward.
It’s still anyone’s guess as to how long this pandemic will last. In times of uncertainty and stress, a fear of finances should be the last of any business owner’s concerns.
Let’s look at some steps and priorities to maintain financial health during the pandemic so you can focus on serving your customers and employees:
Revisit your business budget
For many businesses, the 2020 budget went right out the window when the pandemic started. Many businesses had to reallocate spending for unexpected expenses (e.g. remote work tools, masks and other PPE, etc.). These emergency expenses can add up quickly and leave a lasting impact on your bottom line, regardless of how necessary they were.
In fact, a report from Experian shows that the average small business owner in the U.S. has roughly $195,000 in debt. This amount has likely increased during the pandemic as more business owners take out small loans or lines of credit to survive. Interest charges can quickly eat up your profits and keep you struggling longer.
Now is a good time to revisit your budget and make proper adjustments. Remember, fixing your budget isn’t just about cutting expenses – it’s also about getting the most for your money. This might mean switching to less expensive alternatives or working with different suppliers or providers. You can also examine wants vs. needs in your budget and put unnecessary investments on hold (e.g. new computers, etc.). If possible increase your payments on any outstanding debts to reduce your interest.
Examine your subscription costs.
Subscription products and services can fly under the radar if you’re not keeping an eye on renewals. When you’re in cost-cutting mode, don’t neglect your inventory of subscriptions or recurring fees, such as software-as-a-service tools, furniture rental, equipment rental, or monthly coffee delivery. Some of these you might be able to cut altogether. With others, you may be able to re-negotiate rates, reduce the number of users, or drop to a lower package. It never hurts to reach out to the companies you do business with to see how they might be able to help.
Reconsider your open positions.
Employees come and go, even during a pandemic. If you have employees leaving your company, it might not be wise to rush to fill their empty positions. This could be an appropriate time to reexamine and reallocate duties so that there’s no gap in service to your customers.
If reallocating duties will put a hardship on your remaining employees, consider the advantages of outsourcing. You may be able to scale your workforce with third-party providers, freelancers, or contract employees, especially if there’s not enough ongoing work to warrant a new internal hire. The hourly rate for an outside service provider might seem higher, but you’ll save on employment taxes, benefits, overhead, and a myriad of other costs to make it worthwhile.
Pivot your offerings
A big part of remaining financially successful during times of uncertainty is being able to reach people in a way they need at the moment. For example, when restaurants were forced to shelve indoor dining arrangements during lockdowns, they shifted to curbside pickup and delivery options.
Continue to explore ways you can expand, scale, or pivot your services so that you can keep serving your customers (and potentially reach new ones). You don’t have to abandonthe work you’ve already done to pivot successfully. For example, you might identify ways to streamline the way customers interact with you. If you typically do business in person, you might switch to Zoom meetings, e-signatures, online servicing, or curbside service.
Make financial wellness your theme.
High unemployment, slow business, and tightening budgets were common themes when the pandemic first arrived. For many, these conditions have shown little or no sign of improvement.
To overcome the financial challenges created by the pandemic, make this year’s theme one of financial health. View every decision through a business continuity lens. Removing emotion from decisions can help you prioritize the right actions that will support your bottom line and carry you forward.
Need help cutting costs? Get in touch with HiTouch Business Services to see how we can help!