As weeks keep passing, the Coronavirus outbreak doesn’t seem to come to an end. More businesses are being forced to close their doors, fire their employees, and declare bankruptcy. But before anxiety kicks in, we want to share some tips published by CNBC that will help you understand what to do in order to save your small business.
7 Ways Small Business Can Avoid Bankruptcy
1. Take advantage of government programs
Businesses with fewer than 500 employees can apply for a loan through the Paycheck Protection Program, which was instituted in the Coronavirus Aid, Relief and Economic Security Act. The PPP already has approved 860,000 applications for $210 billion of loans. Borrowers can apply for forgiveness for any funds used for payroll costs, mortgage, interest, rent and utilities over an eight-week period.
Another option is applying for an Economic Injury Disaster Loan through the SBA. The agency has a list of relief programs on their website.
Also, check with your state and town to see what loans and grants are offered locally.
2. Renegotiate contracts
Take a look at your accounts payable. Gather all your vendor contracts, prioritize them, and then start negotiating things like reduced payments or extended terms. You can also work with your landlord to try to forgo rent payments for a set amount of time.
3. Collect any outstanding cash
On the flip side, reach out to those who owe you money and collect. If you were holding an invoice until work was finished, don’t; instead, bill for the portion that was completed.
You can also ask customers for the prepayment of future activity.
4. Reduce staff costs
As painful as it is, you have to reduce your staff as much as possible, either through layoffs or furloughs. Just make sure you handle it with care.
5. Increase productivity
Do as much work as is viable with the least amount of people. Right now you’ll be better off working longer hours with a smaller group than fewer hours with a larger group.
6. Signature required
Make sure that you modify all of your signature approvals, no matter the size so that only the owner can approve any spending. This way, nothing will be spent that you don’t know about.
7. Look past the pandemic
During this time, remember to treat your customers well so that they stick around once things get better. Communicate the status of your business and offer helpful hints. You can also ask those consumers for referrals.
Remember that better times will come, for now, dedicate your efforts to reduce costs, maximize productivity, and survive the crisis.