How can your company regain the momentum it lost due to the coronavirus outbreak? Here are bookkeeping strategies for finding your new normal.
If your business is among the many that have just reopened, or plan to shortly, after the COVID-19 shutdown, you might feel like you're starting all over again. And yes, there are some similarities between starting a business and restarting a business. But there are important differences, too. Let's look at how you can prepare for these new realities with bookkeeping best practices.
That No-Revenue Déjà Vu
The most vivid reminder of your startup days is probably the lack of immediate revenue to cover your expenses. There's no question that can be a source of stress, particularly if your business has substantial upfront costs or a significant burn rate.
In addition, depending on the nature of your business and your particular state's reopening guidelines, you might have to budget for additional expenses that you never had to worry about in a pre-pandemic world, such as Plexiglas shields or extra cleaning staff.
It's also important, though, to remind yourself that you got through the no-revenue phase before and you can do it again. In fact, you have definite advantages this time around, including an established customer base, a trained staff and — probably most important of all — your own experience.
If your business was successful before, you know you need to follow a proven financial game plan, including:
Creating a cash-flow forecast: Given all the uncertainty surrounding the current economy, it makes sense to lower your sights and take things a quarter at a time. That means using a 13-week cash-flow model. Among the advantages of this approach is that creating a 13-week forecast takes less time than building an annual budget. That will enable your business to get back up and running in short order.
It's also important to update the 13-week forecast each week as you track your progress. An important step is to monitor your inventory and supply chains to avoid shortages or account for delays or price increases. Once you see what the new normal looks like, you can work with your bookkeeper to establish a realistic annual budget and cash-flow model.
Arranging financing, if necessary: Here's where those flashbacks to opening your business the first time can actually be beneficial. One of the primary reasons you survived the startup phase was that you did your research when building your business plan and obtained enough financing to sustain you until revenue caught up with expenses. It's important to once again strike a balance between building an adequate cushion and not incurring too much debt.
Research all of your funding options, including government programs and low-interest credit cards. Also, talk to vendors and try to get expanded credit terms while you regain your momentum. Because so many businesses are in the same boat, the climate is more forgiving than it was pre-pandemic.
Training your employees: If your employees have been idle for several months, they might need a quick refresher in basic procedures, especially if they interact with the public. However, you'll also need to be sure they're aware of any state and local guidelines related to COVID-19 compliance, such as wearing masks, and any procedures you want to introduce to increase your customers' comfort level.
Reviewing your marketing and advertising: Again, simply picking up where you left off might not be enough. In fact, it might be inappropriate. Is your website promoting a product or service that's unavailable or out of stock? Is it promising something that COVID-19 restrictions no longer allow you to deliver? Do any of your marketing materials contain language that will now seem tone deaf?
Also, don't assume that all of your regular customers will immediately return just because you've put out your "Open for Business" sign. Take a proactive approach and reach out to them. Many may have developed new spending habits during the pandemic and require different messaging.
Monitoring your money: After you've reopened and run your business for some time, you'll have more data about what the new normal looks like. Again, the most important step during that initial reopening phase is simply to keep track of cash flow. Check to see if your revenue projections were inaccurate, and adjust as needed on a weekly basis. Also, keep an open line of communication with your bank in case you need to secure additional financing quickly.
Congratulations — You're Back in Business!
It's important to calibrate your expectations as you reopen for business. If your company was thriving before the coronavirus outbreak, it might take a while to recover that momentum. But with solid planning and a patient approach, you can get there.