The recent COVID-19 pandemic has pushed local governments to enact stay-in-place orders. They’re only allowed to go out to get essential supplies or fulfil important errands. This leaves businesses, especially small to medium enterprises, in a tough spot. You’re forced to either pause your operations completely or allow your employees to work from home. But with customers looking to save their money for essential items, you’ve likely lost a lot of your clientele.
If your earnings keep plummeting, it’ll eventually keep up with your expenses. You won’t be able to pay off the loans you made to keep your business operational. In other words, you may go bankrupt. And even if you do bounce back after, you may find it hard to borrow money, as bankruptcy completely tanks your credit. Here are ways to avoid this unfortunate situation.
Assess Your Situation
If you feel that your business may be going bankrupt, don’t panic. Take a breather and determine the following:
- How much your projected sales will be in the coming months.
- How much you owe your debtors. And how much you need to pay them every month to avoid going bankrupt.
- How much your monthly expenses are.
These values will determine the profit you expect to make, and if you can still keep up with your credit payments. If you’re not making enough or barely breaking even, you should move on to the following steps.
Get Rid of Extraneous Expenses
Examine every part of your business process. Look for any redundant or extraneous expenses such as a magazine or digital subscriptions you don’t use anymore. Sure, traditional advertising gets you on TV and radio, but you may reach your customers just as well with digital marketing, which is much more affordable. Keep your utility costs low by letting employees work remotely.
Sell Some of Your Assets
Go through your company’s storage and look for items your employees don’t use anymore like old computer sets, chairs, and tables. Sell all of them off, but make sure to wipe data on the storage devices. Consider selling expensive items like meeting room TVs and executive tables as well. They look great and are convenient to use, but they may not be necessary for your day-to-day operations.
Sites such as eBay and Craigslist are perfect if you want to make a quick buck out of your used tools. Get help from your IT team to list all the specifications of each item to ensure your buyers know exactly what to expect when purchasing the items.
Negotiate With Providers
If there’s one thing that’s constant even in a pandemic, it’s your company’s bills. Negotiate with your landlord to adjust your monthly payments so that they’re more affordable. You may also want to ask help from your business lawyer when it comes to negotiations. Scale down your plans on your essential subscriptions like cloud services and internet connection. If this isn’t possible, ask for longer payment terms so that you pay less every month.
Entrepreneurship won’t always be smooth sailing. As such, you should always be prepared for the worst. And there’s nothing worse than your company closing down because of bankruptcy. Follow these suggestions to keep your company expenses to a minimum, or at least until you can keep up with your debt payments. You might need to make compromises and go through frustrating negotiations with your vendors, but they’re necessary sacrifices to keep your business afloat.