As coronavirus disrupted travels, shut down schools and potentially already stopped your supply chain, is there anything you can do to save your business, and even prepare to come out as a stronger company?
Having weathered the last two recessions in 2001, and in 2008, I know firsthand the multiple challenges and how you must feel, and here are a few things to do while you weather the storm:
Now is not the time to panic and lose prospective. It is time to take stock and trim your forecast and follow through with actions. Most likely you are experiencing both delays of inventory shipping from your suppliers and a softer demand from your customers. So, it is important to reevaluate your business forecast for the rest of the year and see where you land.
The goal is to stay updated with supply and demand and be conservative with your inventory. It allows you to save cash for other use and limit your liability if the season continually fails short.
Now is the time to limit your expenses and focus on the cash flow for the next 3 months. There are a couple of areas you can look:
A: Could you ask your supplier to extend your payment term? Many larger companies have lines of credit with their banks that when in need, they can use the lines as cushions while giving you a break.
B: Could you also hold back some major capital investment: that new Apple Computer, can it wait? That office renovation project, maybe it too can also wait since you may not need to add more staff that soon. Here, the goal is to save where you are not going to jeopardize your business such as effort in sales and marketing, so that you can put the cash into hard work.
C: Collect your money if you still have unpaid receivables from your customers. At the beginning of economic downturn, nothing matters as much as collecting your money aggressively because chances are, some of the customers may go under and you don’t want to lose your receivable altogether. The one that collects aggressively will be paid earlier!
If you have not done so, now is time to head to your bank and negotiate a line of credit. I got my first one the second year I started my business. You can go on to Small Business Administration under www.sba.gov. and check out the options.
SBA backs up loans so that banks are able to give you a line of credit. SBA loans come in many forms these days but normally they would require a business to be profitable first. And their process is pretty simple and straight forward.
With interest rates being so low, a line of credit will offer you a flexible and affordable option to staying focused when the time is challenging, and allow you to take advantage of opportunities down the road if you decide to purchase lower cost inventory or lease a retail space that becomes affordable!
Now is the time to stay connected and learn as much as you can on new trends, technology and innovation in your industry. Research has shown that many great companies such as Google and Alibaba grew during a recession. It is in this challenging time that many great ideas are born and tested. Isolating yourself and not following what is happening would only prevent you from participating in the growth of the economy when it rebounds!
At meixu.com, we aim to bring such education and sharing to our women business owners. We will bring you more updates and news in the following weeks. And we also hope to hear from you and learn about your way to save your business and thrive!
For Health and Success,
Mei