Many small business owners have suffered during the lockdown, which was implemented due to the COVID-19 pandemic. The U.S. has become the epicenter of the pandemic and millions of Americans have lost their jobs during the lockdown. The country was already plagued with economic problems, as it is. The spread of coronavirus has only made it worse. For businesses to stay afloat, especially during a crisis, there needs to be more coming in than going out. Maintaining a steady cash flow has become increasingly difficult for business owners. Author and financial realist, Ronnie F. Lee discusses different principles of money management in his latest book, Know Money No Problem 978-1952263583. These principles can be applied to the finances of small business owners as well. The book inherently serves as a guide to wealth acquisition and management.
Lee, as a business owner himself, understands how difficult it can be to maintain cash flow during a crisis. The tips and strategies he shares in his book can improve people’s financial situation and help them on their journey towards financial success. According to Elaine Stone from WordStream, here are three principles to follow in order to maintain cash flow during COVID-19:
· Reduce costs as much as possible
If you’re a small business owner, rethinking your business finances was probably one of the first things you did in March after ensuring your team was safe. If you applied for a PPP loan, you’ve recently reviewed your financials in a level of detail that many of us don’t reach outside of tax season. But even if you have, you’ll want to continually re-examine your financials for the time being.
· Prioritize generating cash over turning a profit
Profit is total sales minus the total cost of producing those goods (your variable costs). Profit doesn’t equal positive cash flow and, remember, what you need right now is cash.
Refocusing on generating cash can definitely be a mental shift, but if you’ve already tackled the top-priority tasks to strengthen your cash flow (e.g., cutting variable costs), many of your usual profit-generating actions can be adjusted or reprioritized toward the goal of generating cash.
· Empower your team with transparency
We’re all saying it so often these days that it’s already become a cliche: “We’re all in this together.” We’re saying it, though, because it’s so widely applicable, whether you’re talking about protecting ask-risk neighbors or preserving your small business.
As a business leader, now is not the time to hide in your office—or behind your laptop screen at home. It’s time to step up and lead—by empowering your employees to step up as well.
How? First, be transparent about your real business metrics and what you need to achieve. In ordinary times, establishing a business objective that the whole organization can work toward together can generate a shared sense of mission, promote teamwork, and foster individuals’ pride in the business’s accomplishments. It’s natural, though, to hesitate about sharing metrics during times when we can only think about cash and coronavirus, especially if your business goals from the booming start to the year have likely been thrown out the window.
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