News of coronavirus cases rising may leave you wondering if you should start preparing your small business for a second wave of Covid-19. If there is a second wave, most small businesses will be better prepared, thanks to both experience and additional resources. Fortunately, most won’t be in the same position as the initial lockdowns and stay-at-home orders in March 2020.
Nonetheless, taking the time to prepare your small business for a potential second wave of the coronavirus could help you understand the right course of action, if and when it becomes necessary.
For small business owners, the goal should be to develop a business continuity plan, taking into account the various scenarios and potential solutions. Although your business is unique and your strategies should reflect this, there are some basic steps you should always take.
Optimize Your Cash Flow
Millions of business owners are currently struggling to rebuild pre-pandemic revenue levels. Even if business doesn’t return to normal for a while, optimizing your cash flow can help in the meantime.
One way to optimize your business’ cash flow is by reducing expenses, especially while business is slow. If you haven’t already, try deferring or negotiating your payments. You may also benefit from refinancing your business debts into a single, more manageable payment.
A cash injection could also help your business to stay afloat while your cash flow is slow. For example, a business line of credit could give you the cash you need to make payroll, while covering other operating expenses. You can also research any grants or government programs to find potential sources of funding with low or no interest.
A second round of PPP funding was signed into law at the end of 2020 with $284 billion going towards eligible small businesses. Even if you’ve already received funding in the first round, you may still qualify for more if you meet certain requirements.
Prepare Your Small Business Employees for the Second Wave
Depending on the type of business you run, you may face a wide variety of staffing scenarios. No matter if your business is deemed essential or only allowed to operate under limited capacity, preparing your employees is a priority.
This includes investing in personal protection equipment and ensuring everyone is up to date on the latest safety measures and precautions. It’s also important to cross-train your employees. In the event that someone is unable to make it to work, you’ll want to know you still have staff that can handle essential tasks.
Consider health and safety precautions you should implement, like social distancing. If your business switched to remote work as a result of the pandemic, be prepared to make the same transition in the event of a second wave or a local outbreak. Evaluate what went well, any issues, and how to improve your work-from-home policy in the event of a second wave of the pandemic.
While it comes naturally to some, others may struggle with the work-from-home transition. Take the time to train everyone and provide the technological tools they need to be successful.
You should also consider ordering inventory or supplies for reserves, in case the supply chain becomes an issue again.
Keep Communicating With Everyone
Your employees, customers, and clients are depending on your business for support and clarity. Setting reasonable, clear expectations for a second wave will help everyone stay in the loop and strengthen your business relationships.
Update employees immediately about any new changes, precautionary measures or contingency plans. Keep your customers and clients informed of your situation – whether that means your business is closed, operating at limited capacity, or fully remote. If you haven’t already, it’s important to make your business’ safety procedures known to everyone.
You can share this information through social media, your website, and other areas of your online presence.
Frequent communication will help put your customers, clients, and employees at ease. However your business continuity plan develops, communication needs to remain a central component.
Diversify Revenue Streams Ahead of the Second Wave
Depending on your business model, there may be additional revenue streams that could help you power through a second coronavirus wave and strengthen your long-term prospects.
Retail businesses should explore opportunities for online sales and eCommerce. The global pandemic created a boost in online shopping that is likely to remain even after the virus subsides. Chances are, your business could benefit from introducing an online shop.
Curbside point of sales are another strategy worth considering. If you operate a restaurant, consider developing an outdoor space, or expanding upon your take-out/delivery program.
Consider what other products or services you could offer if a second wave of the COVID-19 pandemic impacts your revenue. Diversifying your income streams helps balance your cash flow in case one major source of revenue is threatened.
Build Up Cash Reserves
Emergency funds are just as crucial for businesses as they are for individuals. Cash reserves can be a lifesaver when your cash flow is disrupted. And while it’s critical to start saving before an emergency hits, unfortunately many businesses are unprepared.
According to JPMorgan Chase, the average small business has only 27 days of cash reserves – and many have even less. In general, it’s recommended small businesses should have savings to cover about 3 to 6 months of expenses.
If your business is able put aside some extra cash towards savings, start doing so now. If your business is currently struggling to make ends meet, focus on reducing expenses and deferring payments wherever you can.
How a Line of Credit Can Help Your Cash Flow
It’s always better to be safe than sorry, and business owners that take precautionary measures now will find themselves in a stronger position regardless of what happens.
One of the best tools to prepare your business for a second Covid-19 wave is a business line of credit. A line of credit allows you to borrow cash as you need and only pay interest on what you’ve borrowed.
Think of it as an extra safety net that ensures your business has the support it needs to weather a second wave. You’ll be able to cover expenses, invest in new revenue streams, and have more resources to train and prepare employees.
At National, we specialize in helping your business find the best financing solutions, regardless of your industry, goals and needs. Our expert Business Financing Advisors can consult you on the best strategies to ensure you’re ready for the future.
Start preparing your small business for a second COVID-19 wave by applying now!