5 Essential Tasks for Businesses During the Pandemic
With COVID-19 dominating the news and creating havoc in many sectors of the economy, businesses need to be diligent and proactive to survive and thrive. Most importantly, navigating the current economic upheaval requires an accurate financial picture. Here are five essential tasks to help businesses with this goal.
1. Bring financial statements up to date
A clear understanding of your company’s current cash flows, revenues, expenses, assets, and liabilities is critical. For example, in an effort to cut expenses, you might prematurely lay off or furlough workers who may be essential to the continued success of your business.
2. Create a forecast
After getting a solid grip on current finances, project those numbers out over the next twelve months. What will revenues and expenses look like in two months or by year end? Of course, the future can seem especially hazy especially in light of the current crisis. But as the old saying goes, “Those who fail to plan, plan to fail.”
3. Build a three-scenario sensitivity analysis
Because of the future uncertainty, once you’ve established a baseline forecast, create three different scenarios: best-case, worst-case, and most-likely case scenarios. Then come up with action plans to adjust costs and business activity for each scenario.
Don’t leave customers, suppliers, creditors, and employees in the dark. Communicate with your community frequently. If workers, managers, suppliers, and others don’t know what you’re thinking, they may develop erroneous conclusions about the direction of your business. In time, such misunderstandings can lead to unanticipated staff turnover, irritated customers, costly disputes with vendors, and other problems that may take years to correct. Even if the news is uniformly bad, talk to them.
5. Stay in touch with advisors
Attorneys, accountants, insurance brokers, lenders—all these experts can provide independent help to you and your business. Advisors with a fresh set of eyes can analyze your company and offer insights into what their other clients are doing to survive the pandemic. Even better, they are often best positioned to share perspectives about recently-enacted tax law provisions targeting small businesses.
There are some businesses who will likely come out of the pandemic stronger and more vibrant than ever. With proper planning and clear-headed choices now and in the months ahead, your business can be one of them.