Business Survival during COVID-19 - INCREASING INCOME
As the COVID-19 pandemic grows right before our very eyes, it is very necessary for businesses especially “small” businesses, entrepreneurs and gig workers to take some drastic steps to make sure that their doors stay open and services continue to be offered. If your business depends on physical contact with people like salons, massage parlors or gyms; the doors may be closed for now, but it is important to stay optimistic that this will pass as soon as it started.
At Ntare Consulting, we believe and have been telling all our clients and friends that as the world stays in place to avoid the spread of COVID-19, there is a worldwide economic slowdown that is affecting EVERYONE. The idea is that once this cloud lifts, the business world is going to jump into action and there will be a huge demand for services; more jobs will be offered and governments around the world will be working tirelessly to reignite their economies. Those smart business people that took the survival tips seriously will be the ones standing and ready to cash in on their solid preparation.
The following suggestions are almost common-sense measures that every savvy business person should be taking into account. All the recommendations may not fit every business but please pick and choose any and all that apply to you and your business. Good luck, remain optimistic but stay active.
After slicing your expenses and cash outflows, the next step is to increase and speed up the inflow of cash. Like many other businesses, you may be facing plunging revenues so having cash on hand is the best possible way to avoid further collapse of your hard-earned business. These may come as a harder shock than the reduction of expenses; these ideas go against the grain of most business practices but at this time, no business is immune to the downturn.
1. Collect receivables sooner.
Just like you did above to reduce your expenses, you can flip it to get cash in hand by offering your customers a discount for paying sooner. A common discount is 1-2% off for paying within 10 days instead of the normal 30 days.
Tip: Make sure you’re only offering terms (basically, free credit) to your best customers. You’re not running a credit card company. Stop giving your customers free credit at the expense of your company’s survival. Also, be aggressive (but not predatory) in your collection. In this tough time, it’s easy to let a customer slide on paying their invoices on time. But you don’t have the luxury of floating free credit to your customers any longer. If the customer is having trouble paying all their bills just like you, you are probably competing with other collectors. Get to the front of the line by offering lifelines. It goes without saying that you should be friendly, courteous, and understanding while aggressively following up on receivables. You do want to keep their business and using mafioso collection techniques won’t help that cause.
2. Keep your existing customers.
Even if it is impossible for you to service your clients right now, you will still need to let your clientele know that you still exist and will be reopening your doors as soon as they will let you. Now is the time to remind your customers why they chose you in the first place. If it’s because you’re the most cost-effective, remind your customers that your low prices will be as important once the doors are reopened. If you’re not the cheapest, but you offer a premier product or superior customer service, remind your customers of the exceptional value you offer — and that price may not be the most important factor when determining total cost of ownership.
3. Double-down on your best customers.
Most small businesses are seeing new business dry up. This slowdown in new business alone is bad enough for any small business owner, but the loss of your best customers (your biggest accounts) will be nothing short of catastrophic. Call, email, or send a card to your best customers. Tell them you appreciate their loyalty and continued patronage. Ask them to come to you if they have any concerns and are looking to jump ship. Let them know you’re willing to work with them to keep their business. Sign a long-term contract if the opportunity arises! Offer to send them lunch or a cup of coffee to discuss your current and future relationship. It’s a lot harder to “fire” you when you are in contact and they know you’re also concerned about their needs.
Ntare Consulting is a consulting firm that works on financial management, government compliance, fiscal planning and business solutions for entities both in the US and Uganda. We are a full-service business solutions firm and we help start new and/or maintain your existing business. Our process is to get with you and understand your business needs to tailor a process that can help you at the lowest cost possible.