The pandemic tried small business owners on many levels: emotionally, logistically and financially. If the trials of the past 15 months have brought any strengths to the fore, it’s the creativity and resilience of these entrepreneurs. Over the past year, my team and I have been inspired by all the ways small businesses have been challenged to pivot again and again, sometimes with no more than a few hours’ notice.

Now, as vaccination levels rise and communities loosen their restrictions, small businesses are anxious to find new equilibrium and celebrate the return to normal. Now is also the time to shift from survival mode to a strategic opening that will 1) bolster your business’ financial health in ways that will benefit you during the recovery, and 2) prepare you for the next crisis that may come along.

After helping thousands of small businesses navigate the pandemic, it is clear that these three strategic planning steps are key:

1. Get (and keep) your books in order

One of the factors that determined whether many businesses succeeded or failed was whether they received one of the nearly 12 million SBA-backed Paycheck Protection Program (PPP) loans. The application process alone caught many small businesses off guard because they couldn’t quickly provide detailed information on their gross revenues, payroll and expenses. Some borrowers will also have to supply detailed information when they apply for forgiveness depending on loan size.

Put processes in place now that help you maintain a detailed profile of your finances between tax filings. You don’t need to have a CPA on staff. You can study the financial reports that your payroll service provider and POS system generate and sign up for a bookkeeping service. When you keep track of your income and expenses, you’re much better prepared to talk to lenders, investors and even core staff about the financial health of your business.

2. Learn the five Cs of lending and how they apply to you

This past year, PPP loans underscored the value of knowing the five Cs that financial institutions examine when determining whether to extend credit: character, capacity, capital, collateral and conditions. Think about them as a series of five questions:

  • Does your business have a strong credit history?
  • Can you show the bank that you have enough income to pay back the loan you’re applying for?
  • Do you have enough equity to cover sudden shocks?
  • What kind of assets can you provide as collateral?
  • What external factors are shaping your industry or community?

Just as bookkeeping helps you understand your business from the inside out, preparing to talk about the five C’s helps you understand how your financial health looks from the outside in.

Knowing how lenders assess potential applicants can make the process clearer and less nerve-wracking.

3. Secure a line of credit before you need it

At the height of the economic crisis, businesses didn’t rely on PPP loans alone to cover losses or purchase what they needed to offer new services. They used a variety of lending options, including lines of credit.

We all know we should buy an umbrella before it rains and a fan before a heatwave. The same principle applies to lines of credit. Opening a line of credit may give you the flexibility to invest in new growth areas when opportunities come along or secure the funds to cover unexpected expenses, which don’t need to be pandemic-sized to threaten your business. Think of it as a back-pocket option. If you secure a line of credit now, it will ease the stress of applying, and waiting for approval, when the need for funds is the most urgent.

Think of these three strategic steps as a recovery assessment. Your business can emerge from this grueling period leaner, but smarter, with new services, new customers, and a new understanding of how to get ahead financially. Take stock of how you’ve evolved, plan ahead for your financial future, and chart a course to real financial progress so the need to pivot never catches you off balance again.

Niamh Kristufek is the Head of U.S. Business Banking at BMO Harris Bank. She grew up helping with her family’s small business and is honored to help thousands of entrepreneurs navigate the financial challenges of owning a small business through her role at the bank. For more information about BMO Harris Bank’s business banking services, visit

Pandemic lessons stock photo by Freedomz/Shutterstock