The pandemic has drastically affected the economies of many nations, and consequently, the business sector as the public health crisis disrupted supply chains and fueled terror that closed many markets and shops due to lockdown. Unfortunately, it is small businesses that bear the brunt of the economic loss, as these companies have fewer resources to keep them afloat amid calamities. As a result, many micro and small enterprises had to shut their doors, while others fought to stay afloat. This is not surprising as some big corporations like Philippine Airlines, and other foreign ones like Zara, JCrew, Hertz, and JC Penny filed for bankruptcy.
Despite all the difficulty amid the pandemic, some small companies were able to weather the storm, while many that have closed temporarily or permanently during the height of the crisis are now working hard to reopen their doors. Though we are still living amid the covid virus, most have learned to adapt to our current situation and have learned from the events that have unfolded in the past years. However, for businesses, there is one silver lining, and that is all the lessons that the pandemic has taught small enterprises, information that will be useful for companies existing today and those that are to come. Let these hard-earned lessons fuel you to do better and prepare for future eventualities:
1. Set aside an emergency fund
A rule of thumb for personal financial success is to have an emergency fund for situations like these. For personal use, this may be money worth 3 to 6 months of living expenses. The same goes for business. Therefore, it is essential to set aside an emergency fund. You can deposit in a savings account roughly 3 to 6 months’ worth of cash needed to keep operations afloat or deposit it in liquid investments so that it grows as well. This emergency fund should include provisions for rent, the salary of employees, utility bills, permits, and other miscellaneous expenses. Do not touch your emergency funds other than major reasons like an employee accident, machine breakdown, fire, or something of similar magnitude.
2. Be organized with your finances
While the economic pressures brought about by the health crisis do not discriminate, businesses that fell earlier on are those that had trouble with their finances even way before the pandemic. This includes taking out loans that are way too big or poorly managed finances due to irresponsible accounting and bookkeeping practices. To avoid succumbing to economic catastrophe, it is important that you are on top of all your finances from the get-go. Make business plans and hire professional accountants to keep everything in check. You must have all your past records audited by accounting experts to ascertain your business’s true financial standing.
3. Make sure your small business is flexible
Throughout the pandemic, many companies have had to switch to an online work-from-home setting. This has worked for many businesses, proving that it is possible for operations to be run from home. To protect your business from potential situations like this in the future, it is important for your company to be flexible in terms of labor. It helps to have a work portal or online system that aids in running operations from home. This also allows you to protect both your clients and your employees by limiting exposure to the virus. Besides, the ability to pivot amid crises can spell the difference between continuation or demise of your business.
4. Leverage the use of technology and the internet
To survive in the new model, some companies have started out as online shops while old stores have opened up online websites to cater to delivery orders. This is a model that you might want to apply to your business. Harnessing tech and the internet will improve sales by allowing a wider audience reach. It also allows you to cater to at-home consumers who, otherwise, would not be able to go and visit your physical stores. Moreover, social media is an excellent platform for advertising. Just opening an IG page or FB business page does a lot for marketing your business, all the more when you invest in ads. Adopting these practices will allow your business to stay resilient amidst harsh times.
5. Generate added streams of income
The pandemic has heavily emphasized the importance of the saying, “don’t put all your eggs in one basket.” It is vital for both you and your business to diversify. You can make investments under your company or corporation to open other streams of income to ensure that when calamity strikes, you have multiple means of getting back up on your feet. For example, if you sell non-essential items, consider dabbling in essential goods like gasoline, water, LPG, and the like.
The pandemic has been and is still difficult for everyone. It has made the business climate even more volatile. However, this current situation sheds light on fundamental lessons that small businesses can adopt into their business operations. All companies go through highs and lows. Great and thriving enterprises know how to adapt to changes.
Hopefully, with these tips, your small business may grow to be great too. And if you need assistance in accounting, bookkeeping or auditing, don’t hesitate to give our team at UNA a call. Take advantage of our free 30-minute consultation. We’d love to be your partner so we can pandemic-proof your business.