The Big Slump: How Small Businesses Can Keep Finance on Course During the Global Crisis

The impact of the coronavirus pandemic on small businesses is enormous. About 74 percent of small business owners have taken on debt to cope with the financial losses due to the coronavirus crisis; only 13 percent out of 79 percent who had suspended, or reduced operations have since been able to resume operations completely. In comparison, 43 percent have seen a reduction in their gross revenue by 51 percent, according to findings by online marketplace LendingTree.

No one, not even entrepreneurs, least expected a pandemic, one that would plunge the global economy into a recession and whose end is not yet in sight. Be that as it may, small business owners need to get ready for the inevitable storm in these strange and uncertain times to be able to pull through.

Ever since the beginning of the pandemic, financial expert Michelene Desravines innovates ways to bring small businesses back on their feet through her accounting firm Michelene Desravines CPA, LLC. She holds a master's degree in accounting and finance from Keller Graduate School of Management, DeVry University. Before venturing into private accounting practice, she had worked as the financial controller of home healthcare services firm Mega Nursing Services Inc., Fla. With a focus on healthcare professionals, she now helps them save time, money, and headaches by providing accurate and dependable chief financial officer (CFO), tax, and accounting services by putting together a plan well ahead of time, even before a problem arises or tax time.

Her company Michelene Desravines CPA, LLC, is a full-service accounting firm based in West Palm Beach, FL, which provides personalized CFO, tax, accounting, bookkeeping, payroll, and business services to individuals and businesses. She works with large corporations and small and medium-sized companies with unorganized financials, like doctors, dentists, and chiropractors, who know their financials can and should be in better order and ready for a personal relationship with their accountant to eliminate the stress that comes along the way.

So, here are Michelene five ways small businesses can keep finance on course to survive during these turbulent times where the games have changed.

1. Pad Your Balance Sheet with More Cash

Small business owners should know that this is just the beginning of the pandemic's economic recession. It will be difficult for them to get loans in years to come because creditors will be more selective in a buyer's market. Investors and lenders will struggle to survive, and default rates will increase as businesses manage to stay afloat.

But small businesses need cash to cushion further market shocks. They should learn to economize and keep their operations lean. Because things will continue changing, they also need to reassess their business model and explore new ways of making money while working with old ones.

2. Get Funding

Governments and organizations are providing financial assistance to small businesses that are worst hit by the pandemic. So, it makes sense for companies to take advantage of this opportunity by accessing these funds.

The federal government is offering financial assistance programs like Paycheck Protection loans of $10 million for all businesses with fewer than 500 employees with terms of up to 10 years and interest rates of up to 4 percent, economic injury disaster loans of up to $2 million for small businesses and non-profit organizations with an interest rate of 2.75 percent for small businesses and 3.75 percent for non-profits with terms of repayment of up to 30 years, and $10,000 emergency grant for unsuccessful applicants of economic injury disaster loan to enable them to cover payroll, rent, and other operational costs.

Aside from these interventions, various state governments have other programs in place, ranging from grants of up to $10,000 to loan packages of between $50,000 and $200,000.

3. Cut Expenses

Lower your fixed costs. This means you will have to renegotiate your rent, vendor contracts, and the jumbo pay of some executives so you can retain the other employees on the lower rungs of your organization.
Also, automate and outsource some administrative functions to save costs and channel more funds to essential functions.

Other cost-saving strategies you can use include a hiring freeze, salary reduction, reduced marketing spend, elimination of tradeshows and conferences, restricting consultants, and delaying supplier payment.

4. Communicate Effectively

The importance of communication in the workplace in a COVID-19 era cannot be overemphasized. Smooth internal and external communication is essential to quickly respond to sudden developments that may disrupt and change how things are done completely. That will prevent error and misinterpretation in otherwise difficult situations. There should be adequate communication between staff, customers, vendors, and investors.

5. Reinvent Your Business

The shut-in economy is here and has come to stay. Terms like outsourcing, remote, and on-demand are now more pronounced. Some brick-and-mortar businesses are now shifting sales and marketing functions online, while food and beverage outlets move to on-demand catering and work more closely with courier services.
Small business owners are now more concerned about their survival and employees' safety than ever before. In the coming months, chief financial officers will have a crucial role in focusing on what matters during this pandemic. They are already better equipped to assess the pandemic's impact on businesses and know how best to manage the loss of customers or suppliers.

CFOs will then help businesses consider the potential impact of COVID-19 on review engagements, financial reporting by private enterprises, and assurance and advise them on managing cash flow and optimizing remote work. They will also monitor other organizational challenges, like team member performance, retention, mental health, and acting accordingly.

Michelene understands the difficulties of running a business and keeping your books but believes that helping your clients should be taking most of your daily attention, not your finances. She now helps small business owners keep their financial records in order, avoid mistakes, and take care of their books so they can focus on running their businesses and generate a profit.

According to Michelene, while businesses devise new strategies to ensure they survive through the pandemic, CFOs are also amending their business plans since the global crisis. And here's what they are doing.

6. Looking Beyond Liquidity

Some businesses are currently surviving on government assistance programs that have allowed money to be reinjected into the economy. Still, they must have a plan to bounce back if any eventuality is like an end to such problems or a second pandemic wave.

So, CFOs will now look beyond the short term and use the information available to look into the future.

7. Making Employees a Priority

Organizations should now prioritize engaging in a positive and transparent discussion with their employees. They will benefit from it in the short and long term and protect their employees while thinking about recovery.
Rethinking Goals and Strategies

Today, value creation is about measuring performance or returns and integrating profound changes in technological shifts, work-tool adoption, and sustainable investments.

8. Staying Informed

Find guidance on how to account for your social and human capital to make more informed business decisions for your organization.

Michelene firm will review your books and previous year tax returns to assess your needs and what you expect from your accounting system; identify the root causes of your business’s financial challenges and explore methods to overcome them; and hold monthly or quarterly meetings with you, depending on the size of your practice, to review everything and evaluate the progress of your business.