Guest column

4 ways Houston businesses can recover cash flow in a post-COVID world

There's no quick fix to getting back to where you were, but a keen eye and sensible decision-making will ensure you're more prepared than your competitors. Photo via Unsplash

The COVID-19 pandemic has been a cash flow disaster for many businesses, whether it's small restaurants forced to close their doors for months on end or commercial rental properties unable to fill their office space in light of widespread remote working.

Houston, much like many major US cities is facing a big recovery job as the country looks to move on from the worst of the pandemic. While much is to be determined when it comes to what the Delta varient's effect is, businesses are open and the time to think creatively about recovering cash flow is here.

In this article, we'll look at how Houston businesses can get over what was a huge shock and re-evaluate for a post-COVID world.

First things first: Assess the financial damage

Before you can begin to work on a strategy for recovery, your business first needs to assess the financial damage COVID-19 inflicted on it.

There are many different layers to this, which will become more important depending on the size of your business. Start by looking at the hard numbers that define your business (both pre and during the pandemic), such as:

  • Year profit
  • Yearly spend
  • Yearly losses (and expected losses)
  • Employee salaries

There's a chance things aren't quite as bad as you expected. You might have saved on office space through working remotely or have seen an uptick in online customers that represents a revenue shift. This may seem like basic business management, but in a situation such as this, it's easy to ignore the forest for the trees.

Once you've got these numbers in line, you can start to develop a rebuilding plan that relates entirely to your business, rather than cutting and pasting one from another business that is unlikely to have experienced the same issues.

Re-assess your business plan

Chances are, you didn't include a contingency option for a global pandemic in your business plan. No need to panic. If you made it this far, you were obviously a well-structured and organized business. However, to ensure you survive future challenges, it's worth re-assessing your business plan.

Specifically, you need to look at how ready your business is to pivot to the idea of the 'new normal'.

There are many decisions to be made, from top-level finances to employee management to customer service. You may be forced to implement new systems to keep track of your newly remote team, offer subsidies for utility bills to your staff or implement new quality control tests to keep your customers safe and comfortable with your business.

A wider analysis of your industry can be a more effective exercise than looking directly at your plan. Competitors may have innovated in ways you didn't initially think possible. Pay attention to trends and emerging opportunities to mark yourself as a business worth shopping for and working with. Find that profitable niche and see if your business plan can be re-worked around it.

Your business plan will lay bare your business model's strengths and weaknesses in the new world. Don't try and plough through difficult weather with the wrong tyres. Make a simple change, even if it means hard decisions, for the good of your company.

Optimize daily processes and cut out wasteful tasks 

So you've analyzed the damage and re-assessed your business plan for a new set of challenges. Now you can get into the gritty details of making a change.

One of the simplest and most cost-effective ways of getting your business running with a positive cash flow again is to optimize those wasteful daily processes and tasks you and your team get stuck on every day.

Of course, many of these will be unique to your industry and way of doing business, but from invoicing to daily admin tasks, there's so much wasted time every day that could be better spent getting your business back on track.

A few immediate suggestions include:

  • Cutting down on business travel by prioritising virtual meetings and re-thinking how your sales and executive staff travel. Even company cars can become less of a money burden if you take the time to know how to how to save gas (and the money you spend on it)
  • Going paperless and using that printer money to operate through cloud software won't just bring your business into the 21st century, but make daily meetings and employee collaboration more most-effective
  • Using financial trackers to assess your financial situation regularly and automate invoicing, making sure you're always getting paid on time

Monitoring all of this excess spend spillage and ensuring you're on top of emerging problems can be made very simple through time tracking tools. Rather than just a way to keep an eye on remote employees and cut out excessive slacking, Houston businesses can spot which needless tasks are making key employee's life difficult and where budget is being wasted through these (as of March 2020) essential digital tools

.

Consider outside funding options

Last year, we covered how creative thinking in terms of financing can be Houston businesses' path out of COVID financial burden. Since then, much has changed, but many of the methods remain realistic ways businesses of all sizes can recover cash flow.

Unless you went into the pandemic with significant cash to burn, you're likely playing things quite close to the line right now. Without customers through the door and big contracts, you might need working capital to jump-start your recovery.

Fortunately, some great financing options for small businesses have sprung up or gone from strength to strength throughout the COVID rebuilding period. Some of these options include:

Now, not all of these options will work for your business, particularly the ones aimed at small businesses. However, they're all reasonable ways of getting a short-term boost to buy remote office equipment, re-work your business for social distancing to avoid closures or bring in new employees.

The key is not to become reliant on these revenue streams. They should be short jabs to get your business going again, not a consistent fix you should turn to in the event of financial challenges. Borrowing can be both an unhealthy attitude to have and a competitive venture.

Completing these tasks will help you establish a timeline for recovery. No one is quite sure what their business will look like once COVID-19 is completely a thing of the past, but the pandemic should be a lesson that no business can be caught slacking.

The journey to recovery, particularly sorting out your cash flow is full of tiny steps. There's no quick fix to getting back to where you were, but a keen eye and sensible decision-making will ensure you're more prepared than your competitors.

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Kayleigh Alexandra is an entrepreneur and writer at WriterZone and Micro Startups based in the United Kingdom.

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Building Houston

 
 

Kelly Avant, investment associate at Houston-based Mercury Fund, shares how and why she made her way into the venture capital arena. Photo courtesy of Mercury

Kelly Avant didn't exactly pave a linear career path for herself. After majoring in gender studies, volunteering in the Peace Corps, and even attending law school — she identified a way to make a bigger impact: venture capital.

"VC is an awesome way to shape the future in a more positive way because you literally get to wire money to the most innovative thinkers, who are building solutions to the world’s problems," Avant tells InnovationMap.

Avant joined the Mercury Fund team last year as an MBA associate before joining full time as investment associate. Now, after completing her MBA from Rice University this month, Avant tells InnovationMap why she's excited about this new career in investment in a Q&A.

InnovationMap: From law school and the peace corps, what drew you to start a career in the VC world?

Kelly Avant: I graduated from Rice University with an MBA, starting scouting for an investment firm in my first year, and by the summer after my first year I was essentially working full-time interning with Mercury. But, I like to tell people about my undergraduate degree in gender studies and rhetoric from a little ski college in Colorado. If you meet someone else in venture capital with a degree in gender studies, please connect us, but I think I might be the only one. I’ll spare you what I used to think — and say — about business students, but I have really come full circle.

I always thought I would work in a nonprofit space, but after serving in Cambodia with the Peace Corps, working for the National Domestic Violence Hotline, and briefly attending Emory Law School with the intention of becoming a civil rights lawyer.I found that time and time again the root of the problem was a lack of resources. The world’s problems were not going to be solved with my idealism alone.

The problem with operating as a nonprofit in a capitalism is you basically always pandering to the interests of the donors. The NFL was a key sponsor of The National Domestic Violence Hotline. The United States has a complicated, to put it lightly, relationship with Cambodia and Vietnam. It became pretty clear that the donor/nonprofit relationship was oftentimes putting the wrong party in the driver’s seat. I was, and still am, very interested in alternative financing for nonprofits. I became convinced that the most exciting businesses were building solutions to the world’s problems while also turning a profit, which allows them to survive to have a sustainable positive impact.

VC is an awesome way to shape the future in a more positive way because you literally get to wire money to the most innovative thinkers, who are building solutions to the world’s problems.

IM: What are some companies you’re excited about?

KA: There are a couple super interesting founders I’ve met directly engaging with . To name a few: CiviTech, DonateStock, and Polco.

I’m very proud to work on mercury investments like Houston’s own, Topl, which has built an extremely lightweight and energy efficient Blockchain that enables tracking of ethical supply chains from the initial interaction.
I’m also excited about mercury’s investment in Zirtue, which enables relationship based peer to peer lending to solve the massive problem of predatory payday loans.

We have so many awesome founders in our portfolio. The best part about working in VC is meeting passionate innovators every day. I get excited to go to work everyday and help them to build better solutions.

IM: Why are you so passionate about bringing diversity and inclusion into Mercury?

KA: I love working with exciting, highly capable, super smart people. That category includes so many people who have been historically excluded. As an investment team member at Mercury, I do have a voice, and I have an obligation to use that voice to speak highly of the best people in rooms of influence.

IM: With your new role, what are you most focused on?

KA: In my new role, I am identifying and researching high potential investments. We’re building out a Mercury educational series to lift the veil of VC. We want to facilitate a series that gives all founders the basic skills to pass VC due diligence and have the opportunity to build the next innovative companies. My goal is ultimately to produce the best returns possible for our investors, and we can’t accomplish that goal unless we’re building out resources to meet the best founders and help them grow.

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This conversation has been edited for brevity and clarity.

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