How To Weather The Economic Impact Of Coronavirus
If your business hasn’t felt the economic crunch of the coronavirus yet, you’re one of the lucky ones.
First, it was just the obvious players who got hit hard — the restaurants, music venues, airlines, and tourist hotspots. Then came the shutdowns of all nonessential businesses to help slow the spread of the virus.
Now, with millions losing their jobs, wages being cut, and the future uncertain for consumers, remaining businesses can expect a downturn in sales.
It’s a bummer, we know. But when life gives you lemons, you make lemonade, right? And when the world throws you a pandemic and a global recession, you hunker down and figure out how your business can survive, and potentially even thrive.
Throughout history, many big-name companies have been strengthened by tough times. Google and Paypal came out of the dot com bubble ready for success, and newer companies like Airbnb and Square got their start in the rubble of the Global Financial Crisis.
If you can make it through this, then you might just have a successful business growth plan on your hands.
So don’t fret. Sweat. Now’s the time to hustle your way to entrepreneurial stardom.
Simple Startup is here to help you weather the current crisis so you’re ready to rock when the clouds part. The first thing you need to do is get ready to survive a slow year ahead. Here are 5 tips to help you out.
1. Work Hard to Retain Your Current Customers
It may be hard to attract new customers in the near future. That’s why your current customer base matters more than ever.
They’re familiar with your product. Ideally, they like it and believe in it, and want to see you succeed—or at least hang on until all this blows over.
Your current customers are key to helping you keep enough revenue coming in the door to stay afloat, so treat them like royalty. And make it easy for them to make new purchases from you!
A few tips for customer retention in this time:
Communicate like the dickens
- Your customers have a lot on their minds right now. They may have forgotten about how totally awesome you are. Remind them. Emails, social media, blogs like the one you’re reading right now. If you write it, they will come.
Sell gift cards
- If your business’ doors are currently closed and there’s no meaningful way to provide your service, then sell gift cards!
- At the very least, you can expect your hardcore customers to pitch in.
- It gives them something to look forward to, and it gives you a little cash to save for a rainy day. Oh wait, the rainy day is here. It’s right now.
Take it to the web
- Do you provide a service that is normally done in person but could be done online? Now’s the time to make the transition.
- Host live sessions, or pre-record videos that you sell unique access or subscriptions to. Like, for example, the Simple Startup Academy 🙂
Dole out discounts
- Your customers are probably feeling a little pinched right now, just like you.
- A discount would make it a lot easier for them to pull the trigger on your tubular services and radical products.
- Figure out what makes sense for your business model, and cut them prices!
2. Get a Little Help from Uncle Sam
No, not your actual Uncle Sam. He’s the worst. While he probably could afford to help you out right now, you don’t wanna owe him a favor.
The federal government, on the other hand, is the cool Uncle Sam that we all want to hang out with right now. There are a lot of options for small businesses and entrepreneurs who need a little financial help, especially in the form of Small Business Administration loans.
Here are the main ones you need to look into:
Paycheck Protection Program: A forgivable coronavirus loan for small businesses that will provide with 8 weeks worth of payroll costs to keep your staff employed.
Small Business Administration’s Economic Injury Disaster Loans: The SBA disaster loan is part of a disaster relief program to provide super low-interest loans with long repayment plans — the first $10,000 is available is a grant, too.
Federal Reserve’s Main Street Lending Program: A federal plan to support lending to small business.
3. Check in with Your Financial Model
Your financial model is like your business’ Magic 8 Ball. Except instead of asking it if Stacy likes you, you can ask it what your cash flow is going to look like three months from now. And the nice thing is that it won’t respond with “Ask again later.” What’s up with that, Magic 8 Ball?
A well-developed financial model can help you make important business decisions about expenses, profit margins, debt, hiring, growth, and more.
Don’t have a financial model yet? That’s precisely what we do best.
4. Hey! You Got To Hide Your Cash Away
Now is the time to conserve your cash like it’s the Amazon rainforest. You can’t afford to throw a cent away, especially because no one knows exactly how long this economic downturn is going to last. Hold on to what you got so you can cover the basics until things start to look up.
Some basic cash conservation tips for small businesses:
- Have debt in the form of loans or credit cards? Switch to making minimum payments or check in with your loan holders to see if you can defer payments for a while.
- Saying please helps, by the way. The same goes for any suppliers you might owe.
Delay payroll tax deposits
- Your 6.2% payroll tax deposit can be deferred until the end of 2021, when 50% of what you owe will be due.
- The second half isn’t due until the end of 2022. Score.
- Look for ways to cut spending. Office Netflix account? Don’t need it.
- New supplies or equipment purchases in the works? Think again.
- Cutting 401(k) contributions? Not ideal, but you can do it under safe harbor rules.
Process invoices ASAP
- Any money that is currently owed to you from customers needs to get paid as soon as humanly possible.
- Be kind, be understanding, and be patient, but you know, do your best to get those open invoices paid.
Get your tax refund now
- Is your business owed a tax refund? Tax Day may have been pushed back to July 15, but you don’t have to wait. Get your money!
Take our free Cash Management in a Crisis Program!
- Simple Startup Academy is currently offering a free online course to help you come up with up with a personalized plan to manage your business’ cash during this crisis.
- You can take it from home on your own schedule, and you get access to professional CFOs and a network of other entrepreneurs just like yourself.
Learn more here »
5. Educate Your Workforce
There’s never been a better time to sharpen you and your team’s financial skills.
Simple Startup has online courses that will help you design customized financial models and cash monitoring and analysis tools and connect you with a world class CFO who can answer your questions in one-on-one meetings.
You’ll walk away with the tools you need to weather the economic impact of the coronavirus pandemic and come out stronger on the other side.
If you feel like you’re always running around trying to put out the fire of the day and wish you could take a few hours to plan for a future of sustainable growth, the Simple Startup Academy is for you. It’ll be your new happy place.