Times of crisis can bring uncertainty for many reasons and the current COVID-19 pandemic is no exception. Many businesses have experienced a change in their financial situation due to lost business and/or the receipt of money from relief programs. It is critical for businesses to take stock of where they stand financially to make a plan to ensure financial success now and into the future. Knowing where to go for help, what to ask, and how to document your financial situation is key to successfully managing your finances and ultimately recovering once the crisis is over. Whether you need help managing relief programs or analyzing financial health, the expert team at AB Financial is here to help.
Below are three tips from AB Financial on managing your business finances before, and after the COVID-19 pandemic.
1. Evaluate Your Business’ Current Financial Health
Taking a look at the health of your business finances will give you a starting point and will help you determine how you will move forward. Strategic financial planning includes forecasting and financial modeling, which is key to being prepared and being able to adapt to different scenarios and outcomes.
Small businesses often focus on operational finance and omit strategic financial planning due to a lack of capacity and resources. When facing extraordinary events such as a pandemic, only businesses that have planned well can weather the storm. AB Financial has helped many businesses evaluate and develop a financial strategy to ensure their business comes out of these trying times in a better position.
2. Finding Available Financial Resources
The Paycheck Protection Program (PPP), was the first financial relief program that was rolled out by the United States government to help businesses keep their workforce employed during the COVID-19 crisis. The last day to apply for this program was August 8, 2020. For businesses who received this loan, there will be documentation required to ensure the money is fully forgiven.
As time progresses, more financial relief programs have started rolling out at the state and local government level. The state of Colorado has rolled out the Energize GAP Fund. This program is providing more than $25M small business loans and grants to help boost small businesses. Sole proprietors, small businesses, and nonprofits with less than 25 full-time employees can apply for up to a $15,000 grant and a $20,000 loan for a possible combined total of $35,000 in financial assistance.
It is important that businesses in need of additional financial assistance look to their state and local government for new relief programs that will be rolling out over the next several months. We are seeing not only loan and grant programs, but rent relief programs at the local government level (example: Town of Vail Commercial Rent Relief Program).
3. Increase Your Cash Flow
If there’s anything businesses have learned from this pandemic, it’s the importance of having cash on hand. For years, individuals and businesses have heard of an “emergency fund,” but how about a global pandemic that requires a complete shutdown of your business? This time of crisis has made businesses rethink overall cash levels. Many experts are recommending a minimum of 12 months of cash on hand without the expectation of operating without revenue. This model may require a big shift in saving for many businesses.
It is wise to come up with a strong plan to boost your business’ savings. In some cases, that may require businesses to pivot and look at ways to create multiple revenue streams. After you weather the storm of the pandemic, businesses should develop strategies on how to save for the future and the unexpected.
If you are a business owner in Vail, Aspen, Summit County, Grand Junction, or Denver, Colorado who is struggling to manage their finances during the COVID-19 Pandemic, AB Financial is here to help you develop a strategy to get through these trying times stronger than ever. Give us a call today: 970-444-5586.