The pandemic has started dominating all our actions, behaviors, discourses and conversations. With a world that changed in the blink of an eye and changed our perception of normalcy, there is very little we can do to help this. The only things that we can seem to think about are how the pandemic is affecting millions around the globe and how the economy is bearing the brunt of it every single day. Besides claiming people’s lives, the SARS-COV-2 virus has also claimed the livelihood of many people. People who have small and local businesses, part-time workers, daily-wage earners, and non-essential services are the ones who have suffered more than anyone else in the last few months. Big businesses have been able to absorb the shock. But it is the smaller ones that had to frantically look for ways to survive and make it through the pandemic. If you are one among those who have a local business and want to stay put, you might have found your way to the right article. In this article, we shall talk about a few ways in which you can manage the finances of your local business during the pandemic and navigate through these extremely grueling times.
Perform an Audit of Your Finances:
The first thing that you need to do is perform an audit. If you want to achieve your business goals in no time and also stay afloat in these demanding times, an internal audit might be your only way out. Only if you perform a comprehensive audit of your business can you understand where you lack, what resources you have at your disposal and how you can go about making use of the same. There are three things that you must take care of while you go about your audit. They are as follows—
You need to gauge what your assets are. Make a note of all the assets you have, including cash and liquid assets like inventory and equipment. Check what you own and what you rent. An awareness of where you stand with your assets shall help you understand your financial situation.
The second thing that you must take into account is your liabilities. Try to understand if you owe anyone anything like outstanding invoices or debts. Keep track of these so that you can figure out a plan to deal with them. You need to be sure about your liabilities as much as you are certain about the assets.
The final piece of the puzzle is your savings. Check if you have saved funds for emergencies like this one. See if you have enough savings to dip into. If you do not have enough savings to dip into, you might probably want to reconsider what you have been doing and how you have been planning your finances all this while.
These are the three main parts of an audit. Once you have performed a thorough audit of your finances, you must head over to the second step, which we shall discuss in the next point.
Prepare Your Financial Statements:
The second thing that you must do is prepare your financial statements. This is because the financial statements can transform the nebulous figures of your business’s finances and make them understandable for you. You shall be better able to understand how your business has been performing and, therefore, take necessary actions about the same.
Once you are done performing your audit, ensure that you have cleaned up your records and then retroactively create financial statements that go as far back as possible. Once you do that, you shall find it incredibly easy to compare and contrast your statements across months, and even years.
Remember to Create Up-to-Date Cash Flow Forecast:
The final thing that you must do to manage your local business’s finances is create up-to-date cash flow forecasts. This is incredibly important since a cash flow forecast helps in optimal cash optimization and helps you understand how much cash you would need in the future. It helps in making realistic and smart decisions when it comes to finances and helps you prepare for the future. With proper cash flow forecasting, you can take your business forward without any hassle and prepare for any emergencies of sorts. Therefore, creating an up-to-date cash flow forecast is a vital and the final step in developing a plan that shall help your local business stay afloat even in times of emergencies.
In a Nutshell:
The aforementioned points are some of the ways in which you can keep your local business afloat during a crisis and manage its finances well. There are also several other measures that you can take to cater to your business’s finances. However, if you are looking for a comprehensive guide to doing the same, this article might be a great place to start.