Don't wait until it's too late!
As a small company owner, have you got a plan to combat the outcome coronavirus has on small businesses all over the world
I've read lots of articles on how a small business can prepare for the coronavirus and they're all the same:
- Stop business travel
- Practice better hygiene
- Discourage handshaking
- No large gatherings
- Require sick employees to work from home
While that's all sound advice, what about the financial impact herpes may have on your business. Because unless you sell or produce toilet paper, hand sanitizer, or cleaning supplies your online business is going to be impacted.
My goal in this article is not to spread fear but to organize your business for the coronavirus impact.
Small businesses in the countries and US cities, specifically Seattle and China, that were impacted early through the coronavirus provide us with an indication on how this pandemic may affect you.
Coronavirus Effect on Your Business
The coronavirus causes economic uncertainty for a lot of businesses, but it's smaller businesses, who are the backbone of our economy, which are being hit the toughest.
Here's how your business may be impacted, if you haven't been yet:
Slowdown of Business
Consumer spending is down. Fear causes people to stay inside and avoid social gatherings. This in affect means less foot traffic.
If you're B2B, your visitors might be being economical to be able to better manage their funds flow situation.
With the Spring and Summer travel season upon us, the outcome is starting to become felt. People are cancelling or delaying the holiday plans. This will place a major burden on those companies that do many of their business over these seasons.
Bottom lines are individuals and firms are being economical, leading to less revenue for the business.
Delayed Shipments
Companies who ship goods from China are reducing the amount of shipping vessels in an attempt to slow down/stop multiplication of the coronavirus.
In addition to reduced vessels, China has shut down factors in areas impacted by herpes. Other countries are beginning to follow along with suit. This disruption in manufacturing could cause a delay or cancellation within the import of goods and materials.
Higher Costs
As a direct result cancelled or delayed shipments, you might be instructed to outsource somewhere else. I'm sure you negotiated an excellent price and today have to get another vendor, at potentially a higher cost, to create those goods
Another example is your healthcare cost. This may increase should you pay some of your employee's premiums. They may be seeking medical treatment if they're infected through the coronavirus.
How Your company Can Get ready for Coronavirus Impact
To lead your company through the coronavirus pandemic, you have to be thinking both short-term and long-term solutions. You don't wish to make any decisions which could negatively impact your long-term growth.
Here are a few tips you have to consider.
Ensure Steady Cash Flow
Cash flow is the lifeblood of smaller businesses. You should consider obtaining a business loan to guarantee you've money on hand.
Get Lean
You need to look at where to cut expenses. Question any expenditure which does not make business sense. Do you have any “nice to have” although not necessary type of costs? These should be the first expenses you narrow.
You might need to have tough decisions in the short-term such as cutting employee hours or making delayed payments.
Marketing
Consumer are nervous but exactly how can you reassure them? Understand how the coronavirus fear is keeping customers away. Then come up with a strategy to combat this and market this to consumers.
For example, if you possess a restaurant, are you able to do curb side pickup or delivery service. Have the employees tested and use that in your marketing?
Now it's time to obtain Funding
Your best defense against the coronavirus is profit the financial institution. If you will find the qualifications, now's the optimum time to get a business loan while your money flow is steady.
Even if you do not need financing now, you'll have an easier time getting approved before your company is affected. One of the qualifying factors that lenders take a look at may be the steadiness of the income. Negative balances, a fluctuating income, or late payments because of insufficient cash may impact what you can do to obtain approved for funding.
Here are a few funding choices to consider:
Business Line of Credit
A business type of credit is definitely an option that will provide you the flexibleness to possess money available should you need it. Yet you will simply pay interest around the amount you draw.
You can draw from your line of credit when needed to cover expenses that may arise.
It's better to get approved and funded for this option when you still qualify. If your company revenue has a significant decrease month over month, or you have a few negative balance days due to slower business, then this may hurt your chances of getting approved.
As long while you satisfy the following requirements, you might be eligible for a credit line.
- Time in Business: At least 2 years
- Credit Score: At least a 620
- Revenue: Need to be profitable over the past year
SBA Loan
On March 11, 2023, President Trump asked Congress to increase the funding for that SBA (Small company Association) funding program to $50 billion. The SBA Loan Program provides low interest loans to small business owners. The SBA doesn't lend straight to small businesses, instead it backs loans made through lenders. You can get an SBA Working Capital Loan through Small company Funding.
However, while President Trump’s announcement may open more money handy for the program, you will still need to meet the strict guidelines.
- Time in Business: At least Six months but preferably at least 1 year
- Credit Score: At least a 650
- Revenue: At least $25k a month
- Other Requirements: Submit most recent 2 tax returns
Term Loan
Term loans are design for any competent business. Thus the requirements tend to be more stringent. But this loan type have a fixed APR with monthly obligations.
Here are the minimum requirements:
- Time running a business: A minimum of 2 years
- Credit Score: A minimum of a 640
- Must be profitable
- Other Requirements: No recent bankruptcies
Working Capital Advance
The benefit of a working capital advance in comparison with an SBA Loan or Term Loan is with the timing to get funding. In many instances, having a working capital advance you could have funding within 72 hours. SBA and Terms Loans will require between 2 – Four weeks, sometimes longer. Also this type of loan is ideal for a business owner and also require a bad credit score.
The requirements are as follows:
- Time running a business: At least A few months in business
- Credit Score: At least a 500
- Revenue: $8k month minimum
So anticipating and reacting early is the best method to ready your business for that coronavirus impact.