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The COVID-19 pandemic has caused many companies to make changes to their business operations. Some have had to completely pause their operations, while others are functioning on a more limited basis. Still, others have found ways of pivoting to keep their business afloat.
A crisis highlights the significance of having a solid financial foundation for your business. This is an especially important time to look at the financial health of your company and identify areas where changes can be made to cut costs and strengthen your business.
How Much Runway Do You Have?
You can visualize your business like it’s an airplane and look at how much money you need on a monthly basis to keep that airplane in the air – to pay your rent, lights, phones, etc. Then look at how much runway you have. If you need to land the plane, you need a long enough runway so that you don’t crash it. This is the amount of money you need to keep your business going during tough times.
So, for instance, if you normally need $10,000 a month to run your business and you have $20,000 in savings, that means you have a two-month runway. If you are able to get more money from other sources to support your business, then you can increase your runway further. Some might have a runway of just a month, while others have a runway of a year. The longer your runway is, the more stable your business will be in difficult times.
Cutting Costs
Another way to help your business to make it through a tough situation, like a pandemic, is to lighten the load of the plane. This means reducing the monthly financial need in your business. For instance, reviewing and eliminating subscriptions that you don’t need will lighten your financial requirement. You can also look for pay-as-you-go options or less expensive solutions for the things that you must have to run your business.
Remember that everything is negotiable. You can talk to your landlord and negotiable the rent. You can talk to your bank and negotiate payments. You can push off repayment out into the future and negotiate debt. Also, look for any benefits that you can get to help your business. Taking the time to review your expenses and researching solutions can lead to significantly lightening your monthly financial floor.
Now is the time to focus on what you can do – and there is always something that you can do. Your business may need to make changes in difficult times but, in the process, you can also discover new ways of doing things that will improve your business for the long-run.
A coach can help you to review your company’s operations and make necessary changes to keep your business running smoothly and successfully. Get in touch today.
