- Businesses reopening after coronavirus-related shutdowns often face reduced revenues and an uncertain future
- Negotiating expenses, improving your liquidity, and others steps to consider to readjust your expenses
- Now can be a good time to make a significant change to your business model or make a strategic investment
While many companies managed to update their business models to keep some revenue flowing during coronavirus-related shutdowns, they often struggled with drastically reduced revenues. Even as states gradually relax their COVID-19 restrictions, businesses are often facing challenges such as reduced capacities and reduced consumer activity as the busy summer season ends.
In order to stay solvent, business owners should reassess their finances. Creating an updated cash flow analysis, including a review of fixed and variable expenses, will reflect your current situation, let you compare your performance to pre-COVID revenues, and allow for long-term planning. If your emergency fund has been severely depleted, develop a strategy to build it back up.
You may want to negotiate expenses, such as asking your landlord for a lower monthly rent or a lender to extend a repayment schedule. You can also look to improve your short-term liquidity through steps like securing a business loan or taking out a second mortgage. However, this can also result in more debt that will stick with you for years, and it may be more advantageous to focus on eliminating debts and putting yourself on more solid financial footing.
This can be a time to consider major changes to your business as well. Perhaps you don’t need as much space as you thought you did and can relocate to a more affordable location. You might rethink your spending to reduce costs in less effective areas and boost it in others, including strategic investments.
