The crisis is a natural part of living and today, businesses around the globe are witnessing crisis amid the outbreak of the novel coronavirus. Decreased sales threaten all businesses, but small businesses are particularly vulnerable as they often don't have the reserves to help them weather difficult times such as today where there is a lot of news about monetary problems and how they affect the smooth operation of the business. Regardless of how well managed your business is, one crisis could grind things to a crippling halt and you can never be too prepared when it comes to crisis management, something the world is experiencing at the moment on a massive scale. Crisis event requires you to make major changes in your life and the revitalization period is incredibly stressful because along with crisis comes a financial crisis that leads to different factors such as bankruptcy, joblessness, medical bills, etc., but regardless of the crisis, the consequences are always severe. In today’s digital and interconnected world, the news becomes viral in a matter of days and people spread their opinions about your company or business which may or may not be positive and you find yourself in the war to defend negative comments. Whether the criticism is justified or not, efficient crisis management is crucial to getting the situation under control quickly and this fight, social media is your friend.
The very first thing you can do is to protect your cashflow as cashflow is the lifeblood of your business and to keep your small business healthy, cash needs to continue flow. Since small businesses have inadequate resources which often render them incapable of sufficiently dealing with the ramifications of a crisis situation, eventually leading to customer backlash and dip in sales – affecting the company’s profit on a massive scale and also, your credibility takes a big hit. It’s important for organizations to have a communication plan in place to control and effectively respond to a crisis as quickly as possible by securing your cash flow. The crisis leads to a financial crisis more than often and your financial crisis can be remedied by regaining your self-control and taking solid actions before undergoing stress, confusion, loss of confidence, and control. As long as your business exists, you will have expenses and as the crisis will get worse, your cash flowing in will also get worse.
Since cash flow is the lifeline of your small business you should keep an eye of important factors – when the crisis is coming, how long it will be there, and in which direction it will go. Keep an eye on the leading indicators for your business and be aware of changing economic conditions as this will prove helpful in developing a solid plan to encounter a hard time as the crisis is not going to resolve overnight and will probably last a good time. You can also prepare cash flow projections for the year and the next year to gain insights and work accordingly to maintain a healthy cashflow. If such and such things happen, how will you manage cash flow say if drop by a certain figure? You need to have a plan and work around the various possibilities as to what can possibly go wrong and what you can do to right the wrongs and keep your business afloat during difficult times.
Another way of keeping the cash flow healthy is to get your invoice promptly because when you put off invoicing, it gives the impression that you don't care how long it takes to get your money and so, customers don’t bother about your troubles. You can also encourage prompt payment such as clearly stating payment due dates and sending overdue notices. Get the money immediately to maintain your cash flow or else, there is a high probability that you will land in bad debt. Also, there are various cash flow management tools that you can use to manage, track, and forecast your cashflow. Some examples of tools are QuickBooks – a cloud-based accounting application, Sage One – offers an add-on of cashflow management, and your small business accounting software also has a cash flow management tool.