75% OF BUSINESS OWNERS HAVE 28 DAYS OR LESS OF CASH RESERVE

60 Day Plan to Protect Your Small Business

Small businesses are struggling right now. There is no other way around it. 75% of small businesses have 28 days or less of cash reserve, so an indefinite suspension of full operation is going to be a blow. All of that being said, there are some simple steps you can take to minimize the impact that your business faces. This is an uncertain time for all business owners, but as the backbone of the American economy it is up to us to protect our businesses and our personal livelihoods from taking a downturn as well. Here are 7 quick steps you can start to take today to help protect your small business:

  1. Talk to a professional
  2. Be a Leader
  3. Budget
  4. Be creative
  5. Trim unnecessary costs
  6. Apply to the SBA
  7. Apply for financing

1. Talk to a Professional

Whether it’s your accountant, the employee in charge of accounts receivable and payable, or a potential financing partner, you need to talk to someone that can put a second set of eyes on your business. You may not have an accurate picture of your cash flow or your reserves. Finding this information first will inform your plan of action.

75% OF BUSINESS OWNERS HAVE 28 DAYS OR LESS OF CASH RESERVE

2. Be a Leader

If you run a small business that has employees working for you, you need to step up to the plate and swing strong. You are the leader of the business, and they need to be able to look to you for security. In this uncertain time, bringing grit and confidence to your office will be comforting and ultimately drive the whole team to work their hardest.

3. Budget, Budget, Budget

If you review your business plan each year and make updates, you probably already have a budget in place. This budget is almost certainly going to be different now that the world is facing shelter in place and a slowdown of business operations. Review your budget and make the necessary changes to keep your business alive. If your business is busier than normal at this time, be sure to allocate costs to supplies and payroll. If you have had to slow or stop your operations, be sure to find the cash reserves that you can pull from to keep your overhead costs covered. Really try to focus on retaining your customers when it comes to your existing business model. Customer retention can generate new business as well as cost less to your business.

4. Be Creative

Are there areas of your business that could me more profitable right now? Lean into the sectors of your business that will generate money. It’s important to recognize the changes in the market and to adapt to these changes in your own business model. Are you able to make sales and continue operating at this time? If you won’t be profitable, your only option may be to shut down for a significant amount of time until you can operate again. This is obviously not the first choice for any business owner. There are questions of your personal bills, your employees’ livelihoods, and how your business can start back up again. Be sure to consult your bookkeeper, financier, and business plan to see how you can keep operating.

5. Trim Unnecessary Costs

These costs may be found in your budget, or you may have to do a deep dive on your expenses to see where you can trim down unnecessary spending. Take a look at the costs you have for your office space, technology, and products. You want to have a range of products, but you don’t want to waste costs or time on products that aren’t in demand right now. You need to focus your business in on what will generate sales for this period. You can always pivot in your business direction when things lighten up.

When it comes to your office space, consider reaching out to your landlord to negotiate on rent. Possibly you have already moved your operations to remote working, so after the curve is flattened and people return to offices, maybe you keep some employees working remotely to save on the space you need. Obviously you don’t want to force your team to do anything they are uncomfortable with, but having a discussion with your employees about how they feel may bring insight.

Technology can help you run your business more efficiently and save time that is offset by the costs of the technology. Evaluate your tech stack and ask if you are utilizing the technology to the fullest. Is there more you could be doing with the products you pay for? Do the products you pay for really cut down on your costs? These are the types of questions you need to ask yourself and budget for.

6. Apply to the SBA for an Economic Injury Disaster Loan or Paycheck Protection Program

These programs are government backed programs aimed at keeping small businesses alive during this period of uncertainty. There is a lot of information we can give you on these programs, but here is the summary:

The EIDL program offers low fixed interest rates at 3.75% and term lengths of up to 30 years. Funding amount can be up to $2 million or $25,000 unsecured. The funding amount will be determined based on your application strength.

The Paycheck Protection Program offers up to $1 million and is for business owners covering payroll, utilities, rent, and general overhead costs. This program is 100% forgivable if you use the loan amount on approved expenses.

Both of these programs will take time to process, however, the application has an option to request an emergency advance of up to $10,000 that will deposit within 3 days. This advance is beneficial as it will take around a month or maybe longer to process and approve loans. The advance will be eventually deducted from your loan amount. SBA programs typically require higher qualification standards than alternative lenders.

For both of these programs, you may need a few years in business and a high credit score to qualify. In any case, there is no penalty for applying and approval does not require that you accept the loan. So we strongly encourage all business owners to apply to these programs if they need financing.

infographic with eidl qualifications

7. Apply to Financing Companies

There are lots of options for small businesses when it comes to business financing. Non-traditional lenders, like invoice factoring companies, can offer fast business funding to small businesses that need to stay alive or stay strong during good times and bad. The benefit to financing outside of banks or the SBA is that qualifications can be different, so you may qualify for funding where you otherwise may be denied by a bank. When it comes to factoring, we don’t particularly care what your personal or business credit is. Instead, the qualification process relies on the strength of your receivable–that is the product you sell. If you run a good business, then you will be eligible for good funding.

It’s simple. It’s flexible. And most importantly, it’s the same funding we’ve always offered. We aren’t looking to price gouge anyone to take advantage of a bad situation. Our business health is tied to helping business owners have more cash on hand to run their own businesses. We just want to see other businesses stay alive and stay strong during this period.

If you sell B2B and need stronger cash flow, give us a call or check out our pricing structure. We are open to answering any questions you may have. As a small business ourselves, we know the impact this can have on your business and your personal life. Take the necessary steps today in order to do business tomorrow.

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