By Karlene Sinclair-Robinson
At the start of 2020, no one in the Western Hemisphere knew the word coronavirus. No one was talking about it. Though the outbreak was heating up in China, no one in the Americas was talking about it publicly, especially the government and businesses, in general.
Fast forward to today, this pandemic outbreak is at the top of every country’s list of essential topics. The negative impact on small businesses in the United States is ongoing, just as it has done with individuals.
Governmental Support Is Not Everything
Many counties, cities, and states have offered various financial support for businesses, non-profits, and individuals affected. The funds provided through grants and small-dollar loans have been a stop gap measure to help many companies. Some business owners were able to gain access to U.S. Federal funding. These funds were provided through the U.S Department of Treasury and the U.S. Small Business Administration (SBA) via Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP).
These programs funded millions of businesses. Unfortunately, many small businesses could not qualify for these funds or could not get enough to sustain them. Many of these business owners had other mitigating factors that made them ineligible for financial help.
Many of these companies were able to get some help through their State and Local funding programs. The unfortunate thing though, is that the requirements to access these financial programs left many out in the cold. For some programs, home-based businesses could not apply; others were ineligible for their State or County grant or microloan programs because they got access to the Federal dollars.
Shifting Is Critical
How does one prepare for something like the coronavirus pandemic? The changes caused by this outbreak have created many fundamental changes as to how everyone operates in every aspect of life.
The pandemic has caused many companies to close. So many are operating at less than 50% of their pre-pandemic capacity and revenue numbers. They are losing money daily, their debt continues to rise, and their credit will catch up soon enough with the drastic increase in credit usage. The increase in credit utilization shows how many business owners were not financially prepared.
This fundamental shift every business owner must make going forward to survive future upheavals is an absolute focus on financial liquidity.
Cash is King – $$$
The concept of ‘cash is king’ is not just a cliché. It is the single most crucial factor everyone should do their utmost to secure. Many small businesses, even those who were able to get some funding, were still cash poor. They did not have any cash reserves they could fall back on.
They did not have a plan in place. So, they got caught in the whirlpool storm of the pandemic and its effect.
Getting through this period will continue to take time and strategic shifting. Prioritizing keeping as much of the income a business makes is critical. Identifying ways to reduce expenses, improve operational processes while pivoting in service or product offerings.
Making ‘savings’ an expense helps to shift the way one thinks about it. A bill must be paid. So, if savings is a bill, it must be planned for and included in the budget. Yes, you should have a budget that includes savings. It does not matter what part of the global you are located; this is a universal concept.
Try it! It just might work for you the next time some major catastrophe shows up.
Karlene Sinclair-Robinson is the Founder and Managing Member of KSR Solutions, LLC, a business consulting and entrepreneurial coaching firm. Karlene has been called a ‘Business Knowledge Superstar,’ and “The Queen of Business Financing.” She is considered a foremost expert in ‘Alternative Business Financing,’ business development, growth strategies, credit management, small business, and start-up management for success. Karlene has been an entrepreneurial instructor and trainer for over eleven (11) years and is also the author of the bestselling book: ‘Spank The Bank: THE Guide To Alternative Business Financing’ with more to come.