Business Growth

How can Local Businesses Recover from the Effects of the COVID-19 Pandemic?

Introduction

Access the damage

Re-check your business plan

Identify if you need funding to recover

Redesign your budget as per new spending

Create a timeline for the process

Final Words

Introduction

When the Covid-19 pandemic hit the world, people across the United Kingdom started helping small businesses through a ‘shop local’ initiative and started fundraising campaigns. Reportedly, over 90% of small business owners have suffered losses due to covid-19, and only 5% of them have shown they have not realised any effect. Now that the government has begun to roll back social distancing norms and the vaccination price continues to climb, small businesses still require continuous support. Every pound we spend locally helps companies to get through this challenging time to keep our communities together.

Although the short-term outlook can vary by industry, small businesses need to plan what the recovery process will look like when the economy returns to normalcy (or establishes a new normal). A COVID-19 exit plan can help you prepare to rebuild and get back on track. In addition, this guide can help you determine the right strategy to get your business on its feet again.

1. Assess the Damage

The first and foremost step in developing a rebuilding plan is to identify the financial damage being done to your business. It involves several layers that start with numbers. If you have not updated financial statements recently, it is recommended to do it now. You can compare profit or loss from the previous year’s number to determine how much your business is down. Besides numbers associated with gain, sales and cash flow, there are other ways your company has been affected. For example, if you had to release or lay off some of your employees, you would have to consider that fact for a rebuilding plan.

If you have made a cut in your advertising budget or a few of your customers have shifted towards a competitor, consider all these things to find out financial resources to help you recover. Once you know about it, you can certainly plan to mitigate the situation and help your business stand again.

2. Re-check your business plan

Your business might have been working wonderfully before covid-19, now you have to make some adjustments to bring it back to normalcy. First, make sure to consider how your business can adjust to a new normal. For example, suppose your company has earlier relied on foot traffic for sales. In that case, you might have to look for digital markets to expand and target more people who shop from home. However, you are not alone in such a situation. There are platforms like Optimiser that are trying to make this transition easier for you. It is a complete business suite that helps you market your products to the right consumers and develop a report for you to increase more business opportunities in future.

Moreover, analysing how the industry has been affected by this pandemic is also helpful. When you look at your competition, make sure to pay attention to the trends and look for suitable opportunities. When you re-check your business plan, you get a clear idea about the weakness and strengths of your business. Identify what was working for you before, and see what can be done to remain competitive in the market. More importantly, do not forget to amend your business objectives to keep them realistic considering the situation.

3. Identify if you need funding to recover

Unless you had a good amount of cash while going into the pandemic, you are more likely to need working capital to start your business operations. There are several financing options to choose from while building your business again. The government is running various financing schemes to support small businesses recover from the effects of covid-19. However, the funding for such programs is limited. It may get depleted before your loan application is even viewed. Hence, it is essential to consider other sources of financing for small businesses.

Several banks in the country offer term loans, credit unions and online lenders that support small businesses. Besides, you have an option of business lines of credit and business credit cards. Other private financing includes vendor trade lines, accounts receivable financing, merchant cash advances, inventory financing, equipment financing, and purchase order financing. All these options have their pros and cons. Choose any of them as per your business requirement.

4. Redesign your budget as per new spending

While recovering from the effects of covid-19, you may have to spend first before you start earning any money. For example, you require money to hire and train new employees or rehiring the ones you laid off. Besides, inventory needs to be purchased again. You may have to revamp your advertising budget to start building a fresh buzz.

To recover from the effects of coronavirus, you need to have a clear idea about budgeting and use it for the maximum possible revenue. Here the aim is to mitigate monetary waste and keep your operating cost low. Then, when the need for investment comes for business growth, you remain in a position to take advantage of it. Also, you can think of deferring your salary or a pay cut. However, it entirely depends upon how well you can manage your personal financial obligations. Skipping your paychecks can help your business to stand on its feet much faster.

5. Create a timeline for the process

You may want to do various things to recover from the effects of covid-19, but managing all tasks at once is not realistic. Instead, having a timeline in mind with priorities is recommended. For example, suppose your immediate goal is to secure funding. Once you get that, you can set up a time to hire or rehire employees, followed by restocking of goods, and lastly, opening the doors of your business again. When you take these slow steps towards recovery, make sure to track progress. It is essential, especially when you have secured funds and do not want to waste time on activities that do not offer good ROI.

During the initial recovery phase, you should check the status every week to see what is working or what is not. As you progress, you can shift to review on a monthly basis when things start to stabilise.

Final Words

The pandemic has taught us the importance of adapting and keeping business running regardless of the situation. For example, your employees did not have the option of remote working, and that is something businesses incorporated. The more outside-the-box thinking you may have for different situations, it would improve the odds of survival of your business and strive during troubling financial times.