The following is a guest post.
Sales are low, utility bills are piling up, and your employees need to be paid. We know that the COVID-19 pandemic took its toll on our economy. Businesses from different industries, big and small, are affected by the crisis.
But do not lose hope. There are ways on how to manage your monthly business expenses and save your business from crashing. One way to help your business survive this pandemic is to manage your cash flow. Here are some tips you can use to help you handle your expenses.
Managing Monthly Business Expenses
Cut Your Monthly Budget
Cutting your monthly budget would be the first thing that comes into mind. Although it would be hard to do it, the situation has already called for desperate action. List down all your monthly expenses and categorize them by identifying what is essential and what is not.
All the unnecessary expenditures should be erased on that list. Only leave the ones that are needed to run your business. A little sacrifice will go a long way, better let go of small things than lose the important ones. Always remember that it is just a temporary sacrifice. Once we are back to normal, you can slowly pick up what you let go of.
Closing your Physical Store
One thing you can do is to close your physical store temporarily. Another sacrifice you need to do in order to save your bread and butter. Everyone is afraid to go outside, including your customers, and having a physical store during a pandemic will only eat up lots of money from your pocket.
By closing your store, you can save on rent, which you can use on other more important things. Closing your physical store does not mean halting your operations. If you are selling products, you can opt for e-commerce. Selling your products online will not only save you money from rent, but it will also help you reach more customers.
If you are offering services, you can temporarily transfer your office to your house. What you need to do is to inform your customers about the transfer. Posting about the services you offered online will also help you tell the people about your services.
Communication is the key. Contact your suppliers and try to negotiate terms with them. If you are a good payer and have been doing business with them for a long time, they may agree to some of your propositions. You can help each other in keeping your business alive during the pandemic.
Contact your utility providers and ask them for alternative payment terms. Some service providers offered their consumers an alternative payment arrangement that is customizable to fit each consumer’s situation.
If you have existing loans, you can also talk to your lender and ask for some advice regarding your debts. The government has reached out to the lending companies regarding the debts people owe. Most lenders are working side by side with the government to help the community in this global crisis.
This means that lenders have created a way to help their borrower’s expenses reduce. For example, if you have an outstanding balance on loans, better inquire how much balance you have left. When you already have a small balance, it is better to pay it off to reduce your monthly burden for the upcoming months.
Track your Cash Flow
Tracking your cash flow by documenting all money that comes in and out can be an excellent way to help you manage your expenses. Both necessary and unnecessary costs will be visible, and you will be aware.
Knowing where your money goes is the most critical aspect of managing your finances. You can track your improvement in budgeting, and you will know if there is something that needs to be removed from your budget list.
Prioritize Emergency Fund
This might not be a tip on how to manage your monthly expenses, but this is one of the solutions. Having an emergency fund for your business will help it during this trying time. Occurrences like this are inevitable, and even the COVID-19 pandemic will end, we should always be prepared whenever unfortunate events happen.
Most businesses are alive because of their emergency funds. If you do not have one yet, better start saving for this kind of situation. Set a goal, and when you reach that goal, you can begin to slow down in depositing money to that particular account.
If you’re out of an emergency fund, you can resort to government grants for businesses affected by COVID-19. You might also want to apply for loans offered by different banks and lending platforms. The majority of these lenders have online application programs, making them accessible for lenders. For instance, installment loans from CreditNinja and other quick cash loans can be used to cover necessary expenses for your business
What are the Major Expenses of a Business?
To better manage your business, you must know what to prioritize and what to sacrifice. Here is a list of major expenses a business has. You can refer to this list when you start to list down all your monthly expenses.
Rent is a necessary expense of a business establishment. This is why opting for temporary alternatives during the pandemic will be a beneficial move to reduce your monthly expenses.
Your employees’ effort needs to be compensated. As the business owner, it is your duty to pay your employees the right amount with added benefits. If you decide to close your establishment temporarily, these expenses will automatically be deducted from your monthly dilemma.
If you want to help your employees and decide to keep them, you can talk to them about cutting their salary until everything returns to normal. It is better to have half than to have nothing. However, make sure that if you keep them, your business will not suffer.
Utilities and other Supply
Your establishment will not only require you to pay for the rent. You will also need to pay for utilities, services, and other supplies you use in running your business. You can cut down on these expenses if you use alternative resources.
Paying tax is an obligation. Research tax payment during the pandemic. The government is doing its best to help all businesses to survive the pandemic. There should be a way to ease up your tax obligations temporarily.
There are strategies to efficiently manage your monthly business expenditures in times of crisis, such as COVID-19. By controlling your expenses, you can lengthen your budget until the pandemic is over. By that time, your next move will be improving and expanding your business to earn more. And if you want to read more about managing your business through this crisis, you can read this article: Managing Your Small Business Through The COVID-19 Crisis