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:
- Small business loans from banks, credit unions and private investors
- Business credit cards
- Vendor tradelines
- Merchant cash advances
- Inventory financing
- Equipment financing
- Online crowdsourcing (you may be familiar with the variety of great platforms out there)
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.