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The worldwide pandemic has wreaked havoc on a large number of small businesses, leaving many looking for solutions to ease financial strain.
We asked 11 experts to share their financing tips to help small businesses during the Covid-19 Recession.
Here’s what they had to say:
Don’t cut Marketing
During recessions, the first thing most companies do is cut their marketing budgets. How are you going to stay at the forefront of your customers’ minds with so much going on? Instead of cutting your marketing budget altogether, be more strategic and mindful about what you are spending your money on. Consider marketing efforts you wouldn’t normally try in robust times. Don’t let customers forget about you. John Yardley, Threads
Get creative
Small businesses that sell goods should explore options related to cutting inventory costs without giving up the quality of your products or hurting your customer experience. Some ideas of this would be reducing inventory to accommodate the current and projected demand during this time, negotiating better prices with suppliers or shipping items straight to consumers rather than to a warehouse. Being creative and resourceful when cutting costs will get small businesses through these hard times. Peter Babichenko, Sahara Case
Cut nonessential costs
Financing tips during a pandemic aren’t easy, but I think it’s important to find what makes your business special and do everything you can to keep that going. The rest you can build back later. For now, focusing on cutting costs and staying afloat should be priority number one. A good number of the largest companies on the planet are going to remote work (Twitter, Facebook). If you’re a small business cutting costs can be tough, but office expenses are a great place to start. William Daniel, Financial Services SEO Company
Diversify your offers
One great way to survive during the COVID-19 recession is to diversify your offerings. Many of my clients have already started working in this direction. Most of them who mainly had a physical product are now developing a digital version of it. We are already seeing so many academic institutes turning their class-based lectures into downloadable online courses. Likewise, many eateries are transforming their traditional phone ordering systems into online food delivery apps. Small businesses need to pivot and think about going digital to weather this crisis. Joe Wilson, MintResume
Monitor your Credit Score
Small business owners should pay close attention to their personal credit score to give themselves the best chance at obtaining reasonable financing in the future. Most banks use personal credit for small business owners when assessing risk. This is especially true for small businesses that haven’t been around long or are too small to establish a business credit score. One tip is to look at your credit utilization, which is the amount of credit available versus the amount being used. A good rule of thumb is to use less than 30% of the total credit you have available. Getting below this number can help quickly improve your credit score. R.J. Weiss, The Ways to Wealth
Consider consolidating
Maybe it’s time to consolidate operations or offer similar non-competing business space in your office to share? Talking to someone facing the same concerns has many other benefits for the mind and soul – not to mention the ideas that may come from collaboration. Alex Pesic, Invoice Quick
Offer discounts to rid stock before tossing
Small businesses are dying, and that’s even without the pandemic coming into effect. However, due to what has happened around the world, more of us are conscious to shop local and use small businesses in order to support the local economy.
With this in mind, there is also help from many banks around the country that offer support to those struggling to stay afloat. My number one tip to help small businesses, especially those that offer goods rather than services, is not to throw anything away, but use discount sales to get rid of their limited stock. Although you may not make a profit on what you sell, it is better to sell at a marginal loss than throw away money without any effort. I have seen bars pour their beer down the drains, losing approximately $4,000 worth in just one barrel. Think about it logically and come up with ways that will help those around you and your society while ensuring that your livelihood is not jeopardized. Andrew Roderick, Credit Repair Companies
R&D Financing
Companies often think about financing in terms of either selling stock or getting a bank loan, but these aren’t the only options. With Covid-19, we’re seeing both governments around the world and financing companies become more versatile and creative. One form of funding that many companies aren’t accessing (even before the crisis) is R&D financing. This type of funding gives companies the opportunity to use future a government receivable, like an R&D tax credit, just like they would use a car, a house, or a piece of equipment as collateral for a loan. This is especially useful to companies that are at the beginning of their journey, don’t have a lot of revenue, and have invested in technology. These small businesses have often been hardest hit by the recession, and R&D financing could be the cash flow solution that many are overlooking. Alex Kaschuta, Fundsquire Australia
Consider it a Sales Pitch
Applying for a loan is a lot like pitching an investor. You need to convince your loan officer that your business is sound and that an influx of new funds from a loan by them is a sound investment. You need to demonstrate how the funds will be used, why they’re necessary, and how the use of the funds will make your business even better and more profitable. Once you’re ready to move forward, getting loan offers from other competing companies is the best way to improve your negotiating position. Demonstrating that you’re willing to go to a competitor, have already spoken to them, and know what your business is worth is very powerful even if you prefer to stay with your current company. Adam Sanders, Successful Release
Don’t ask for Credit Card Extensions
The PPP and EIDL are still available for small businesses as financing options right now and the terms are very good if you need to borrow money. We have shed all luxury expenses at this point, paid off all of our debt, and froze all hiring as well. Now it’s time to do a ton of internal projects that weren’t getting the attention they deserved when we were too busy to do them and keep debt to a bare minimum. The loan options from the SBA are extremely favorable right now so we may be tapping those for some of the larger projects we’re considering doing now that we have time. There’s no other money anywhere we’ve been able to find that is as cheap as the SBA loans up to this point. Do not ask your credit card for extensions on your payments either, they are lowering credit lines of people and businesses that ask a week or two after you ask. Ben Walker, Transcription Outsourcing
Ensure you continue complying with Regulations
Making more investments in your business after a long period of reduced income, or possibly no income at all is a tall order. However, it’s also a necessary one. Without these steps, you potentially run the risk of falling out of compliance with local regulations. This not only means potential fines, but it could also tarnish your brand’s reputation. A lot of customers are going to be reevaluating the businesses that they patronize as things start to open up. Now is the perfect time for you to potentially capture some of that new market as well as reconnect with old customers. However, you need to have the planning and measures in place that will help them feel confident in their choice to support you. Rob Misheloff, Smarter Finance
