History is often the best predictor of the future. If correct, more chaos is likely ahead. Here are four ways to prepare for difficult times ahead.
Over the past two years, we have had COVID, rioting in large cities, political instability, hurricanes, rampant inflation, and many other “surprises.” Assuming that the past is the best predictor of the future, one can assume that more “surprises” are in store in the coming months and possibly years. Here are four ways to prepare for difficult times ahead.
Despite many unknowns, entrepreneurs focus on what they can control. As a result, there are actions that you can take now that may make all the difference in your ability to weather difficult times ahead and possibly even emerge even stronger.
1. Streamline your operations to make them more efficient.
Because of rising prices and a labor shortage, it’s critical for your business to run as efficiently as possible. The following items may help keep your company running efficiently during lean times:
When it’s time to outsource, know when to do so, there is an opportunity cost to doing everything in-house. In addition, highly specialized jobs may cause your employees to become distracted, making it more difficult for them to bring in new clients and money.
What tasks can be automated? Automating routine operations like billing, employee time tracking, and e-commerce saves time and money for many small firms.
Consider changing your business hours to make your business more efficient. All retail businesses, particularly restaurants, should analyze the costs of their operating hours. Consider cutting back on hours if they cost you more money than they are bringing in.
2. Reconsider your spending and establish a financial reserve in case of an emergency.
When pandemic limitations were lifted, consumer spending soared, and many firms increased their spending to take advantage of business opportunities. However, as the number of COVID cases rises, reconsider your spending and set up an emergency cash reserve.
You may also want to assess your marketing activities and reconsider campaigns that are not generating a return on your investment. You might also evaluate the performance of your vendors and suppliers and renegotiate or terminate contracts if you aren’t getting the value you expect. Finally, consider deferring high-cost initiatives in your business, such as expanding your employees or opening new locations.
It should become easier to develop an emergency cash reserve as you follow these measures, which is very important for small businesses even in the best of times.
3. Estimate cash flow and determine financing solutions to close any shortfalls.
We have talked about the importance of forecasting cash flows as part of the planning process. Create a cash flow forecast or update an older one to show how your company’s money flows in and out over a set period. It’s a good idea to keep three to six months’ worth of operating expenses on hand.
If your forecasts show that you will need additional funds, begin looking for financing options as soon as possible. Consider a merchant cash advance, working capital loan, or an SBA loan with low collateral requirements, competitive interest rates, and long-term loans. It’s worth noting that the popular SBA 7(a) loan can be utilized for things like inventory purchases, wages, and administrative expenses.
Even if you’re confident in your cash flow estimates, keep in mind that having financing and not needing it is preferable to needing funding and not having it. In addition, the Delta variant has been a wild card in our economy’s recovery, and the Mu variant is an unknown, so having additional financing sources could be beneficial.
4. Strategize when you can most afford to
The best time to plan for the unexpected is when you don’t need the money. Instead, work with your accountant or business consultant to find ways to improve your financial performance. Financial experts are aware of the difficulties in navigating today’s business environment, and they can’t offer any advice if they don’t know what you are dealing with.
Improving your relationship with your lender will make it easier to secure funding when you need it.
American small business owners are adaptable and resilient. Entrepreneurs who plan for the unexpected are more likely to overcome challenges and thrive under challenging circumstances. Zip Capital Group can help. We are small business experts and can help you with a range of small business financing options ranging from applying for an SBA loan to working capital financing.
Prepare for difficult times ahead
Hopefully, this blog post is helpful to you in preparing for tough times ahead. We realize that it often takes capital to prepare. If that is the case with you, we can help. We are small business owners for small business owners and can help you get the funding you need to move your business forward. We can help with everything from a working capital loan, merchant cash advance, equipment loan, and SBA loan. Contact us today or call (800) 795-3919.
Hopefully, “4 ways to prepare for difficult times ahead” was helpful.
