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Crises, whether foreseen or unforeseen, need a planned response and recovery strategy. This response and recovery is different for small businesses which are structured differently from large established businesses. As a result, measures that work well for an established business may not work for small businesses or startups that were forced to suspend operations and are now looking at recovery.
Whether yours is a CPA firm impacted by COVID-19, or a small business operating in a different industry than before the crisis hit, ensuring sound financials is one way to guide your business into sustainability. According to a McKinsey report, for many small businesses across sectors, COVID-19 hit at a time of low financial resilience. A survey they conducted revealed that almost a third of their survey respondents were operating at a loss even before the COVID-19 crisis hit. Small businesses also lack the power to control costs. For example, balance sheets for businesses in manufacturing, retail, and restaurants reveal a lack of flexibility because of fixed costs such as occupancy rates cash invested in the business’s inventory. Often, clothing stores maintain 90 days’ worth of sales in their inventory, creating pressure on margins, especially given that clothing inventory is seasonal and has an expiration date that depends on trends and seasonal changes.
Battling the crisis and emerging stronger
Reorienting business goals is the first step when considering reopening your business after a crisis. Knowing where to begin can help. For small businesses, this could mean identifying the critical components of your re-emerging business’s crisis resistance.
Here are some ways businesses can reset goals and begin recovery and rebuilding:
It helps to assess financial status when looking at reopening or rebuilding a business, especially after a crisis has wiped out most of the funds and resources, and also depleted income prospects from clients. Creating a new financial plan, outlining how existing funds will be utilized, and determining the need for additional funding are all elements that need consideration when assessing business financials for a planned reopening. If additional financial aid is needed, it is essential for businesses to understand the liabilities and interest rates associated.
COVID-19 has taught a lesson globally: there are certain changes which are probably permanent now. Small businesses looking at rebuilding can start with a review of their infrastructure resources to determine whether they need to realign with a new process or system. Demand has fallen, workforce is either furloughed or has been cut due to revenue loss, and this can directly affect deliverables. Possible solutions to the infrastructure challenge could be to shift to a remote workforce and to consider the cost savings benefits of a strategic partnership and the access to current infrastructure and expertise it offers.
There is no one answer to a particular challenge. It is important for a business starting over again to consider multiple options, whether it is about choosing which services to use or which infrastructure decisions to make, or whether to hire resources, based on the financial capability to pay salaries. Strategic business partnerships are a good way for small businesses to start over. The outsourcing partner provides resources and infrastructure while the small business owner launches their business with this critical help, in the process establishing a slow and steady presence without burdening existing systems.
Growing your business beyond sustainability
Crises are a part of life. This is an oft-heard statement until your own business is impacted. Crisis resolution is typically difficult because one gets overwhelmed by loss, negatively impacting critical decision making abilities. Being prepared is the only way to deal with a crisis without affecting sustainability. For businesses, being prepared includes preparing infrastructure, reviewing software and automation options, and ensuring necessary backup.
Strategic partnerships can help businesses in their journey to recovery in multiple ways. Businesses can access the proven systems provided by the partner, while saving on costs that would otherwise be needed in setting up systems in-house. This includes hiring professionals, setting up an infrastructure, and even accessing business building insights. Analytix Solutions works closely with small businesses and startups, helping to understand requirements, identify challenges, and create resolutions, while utilizing technology. Email us at email@example.com or call us on 781.503.9002 to find out how we can help you reorient your goals to ensure your business thrives.
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