The COVID-19 pandemic has had huge impacts on businesses big and small. According to research conducted by Yelp, 60% of businesses have permanently closed as a result of the global pandemic, and more are still struggling to recover.
It can be hard for a business to pick itself back up after huge losses, but it’s not impossible. Here are five ways small businesses can recoup pandemic losses.
1. Review your business plan
Your business plan may have been designed to suit the conditions before the pandemic began, but we live in a different environment now. A review and revision of your business plan may be necessary.
For example, if you own a restaurant and have never had an online presence, you should consider setting aside funds for building a website that can take orders and offer delivery. This, and many other simple modifications, could ensure the continuity of your income despite the pandemic, thus helping your business recover sooner from its losses.
2. Evaluate your financial losses
Research has found that cash flow was the biggest problem for small and micro-enterprises during the pandemic. Proper cash flow management and assessment is key to mapping a recovery plan.
You can start with a detailed study of your cash flow — profit and losses — including records of all transactions, purchases, returns, inventory, rent, salaries, and so on. This will help you keep your eye on the goal to recovery, manage your finances carefully to make up for lost revenue and spend reserves wisely.
3. Hire freelance finance professionals
Many business owners might be hesitant about the cost of hiring professional accountants to help them sort out their finances. However, this is one case where the costs are worth it — and in fact, might not even be too expensive. Antenna founder Brendon Schrader notes that hiring a freelancer allows a small business to find targeted and better qualified talent to address their needs at a much lower rate.
Universities offer courses on finance and business administration online, and this has allowed more people to get the necessary training and qualifications to practice freelance accounting. With proper accounting, this will help you assess how to recover from your losses more accurately.
4. Plan your business expenses in advance
Small business owners need to plan in advance where limited funds will go next and how much can be allocated for certain business needs. Distribute a portion of the funds to go back into the business for capital expenditures, costs to restock inventory, expenses for planned maintenance, salaries, and maybe even funds toward an emergency reserve account for sustaining business operation — just in case another coronavirus variant develops. Planning expenses in advance can help you predict how soon you should be able to regain lost income, and whether full recovery is possible.
5. File for bankruptcy
Bankruptcy isn’t the only method to fix debt, but if you owe a lot of creditors, it’s often the most expedient way. As extreme as it sounds, bankruptcy offers a few benefits to belabored business owners. It can help your credit score go up, and the consolidation of debt can also be helpful. However, declaring bankruptcy and opting for consolidation isn’t a magic bullet, and can come with its own challenges. You can schedule an appointment and consult with us before opting for this route, and we’ll help you determine whether filing for bankruptcy is the best course of action for your business.
Everything in this life comes in cycles. With the worst of the pandemic behind us, it’s high time businesses started thinking about ways forward. The world has started to adapt to the new normal, and with careful work and recovery planning your business may be able to do the same.
Post solely for the use of jenleelaw.com
By Joanne Bella
This is just a basic overview and is not legal advice specific to your situation. If you have questions about your rights when it comes to debt and credit, you should speak with an attorney in your area for legal advice. If you live in California or North Dakota and would like to speak with Jen Lee Law regarding your situation, please schedule an appointment.