For some time now, business owners have been told that things will get more challenging in the coming weeks and months, yet as COVID-19 infection rates continue to increase, governments are rethinking their decisions to loosen restrictions. Regardless of the turbulence this pandemic has caused, organizations still need to manage their finances correctly.
During such unpredictable times, business owners and entrepreneurs must have multiple contingency plans to keep their organizations afloat. Are you concerned about the current economic slowdown and the profitability of your business? If yes, Jared Jeffery Davis Sandusky, Ohio, a business owner, has some essential guidelines for making the best financial decisions.
1. Cutbacks
For business owners, this is an ideal time for cleaning house. A look at your current expenses can reveal a redundancy of services—software and apps that carry out numerous tasks but can potentially overlap. It is essential to take stock of the services you need and don’t need, and to recognize any services with redundant purposes. This can bring some radical changes to your organization; cost-cutting is never a comfortable endeavour, but it is something you must embrace if you want your business to remain profitable during the pandemic.
2. Debt analysis
With the ever-increasing uncertainty of the market, debt settlement inquiries will go up. It is essential to revaluate your debt to equity ratio and develop a plan that will ensure your business is not leveraged too heavily on debt. It is crucial to maintain a proper cash flow and liquidity balance; your expenses should not be more than the income you generate. Now is the time for debt analysis, that is, if you are having problems clearing some long-standing debts.
3. Plan results
With every eventuality, there is a best- and worst-case scenario, then there’s everything in between. We rarely have control of the environments we are operating in, but we can certainly prepare and control for multiple outcomes. Consider taking some time to do a theoretical analysis of the different scenarios your organization might find itself in. Use cash flow projections to prepare for these scenarios, consider that payments will be slower and consider the effect that might have on your cash flow. If you’ve assessed each scenario, you will be prepared to act accordingly.
Cash flow and liquidity is the lifeblood of any business, without steady cash inflow and outflow it’s challenging to maintain a profitable operation. A balanced and systematic ratio of cash inflow to outflow is essential to the survival of any business during these turbulent times. Opting in for new payment options such as early payment and cashback—when possible—can help to retain balance in your cash ratios. During this phase of the pandemic, businesses need to remain vigilant regarding the finer details of their finances. The above-mentioned guidelines will help business owners and entrepreneurs not only to remain profitable and survive the pandemic, but to thrive as things start to become better.
The Jared Jeffrey Davis Scholarship has been created to help one student defray the high cost of university tuition. Jared believes that everyone who seeks high education should be able to do so. The Jared Jeffrey Davis Scholarship is the result of his commitment. @jdgoblue181
Financial stock photo by Blue Planet Studio/Shutterstock
