by Corey McCaster | August 13, 2021
The pandemic has affected business owners in a variety of ways. Few business owners were completely unscathed. Some started to experience a negative impact but were able to adapt and adjust to turn it into a successful year. Then there were some for which the pandemic hit too hard and they had to, unfortunately, close the doors.
The business owners who are rarely mentioned in discussions regarding pandemic impact are those who were struggling, for whatever reasons, before COVID-19 was a factor. Some of these individuals were able to secure one or multiple emergency funds and took it as a new start.
But unless those business owners learn how to fix their previous issues, they’re going to see double trouble after the pandemic truly subsides.
Though there are grants and forgiveness opportunities for the Paycheck Protection Program (PPP) loan, there are many emergency loans that must be repaid, and some, within a small window of time.
It’s the time constraints that are concerning for those business owners who did not adjust certain detrimental conditions before resuming business.
Post-pandemic is a new world for all business owners. Those who were successful pre-pandemic and were able to adapt to this world, not only survive, but can thrive.
Those who were struggling pre-pandemic must evaluate the following areas to maintain the temporary reality their books are showing due to the cash flow of loan or grant money.
Financial Management System
Having a sound financial management system in place is key, even before the pandemic. Business owners must ensure that they have a solid bookkeeping system set in place. This will help them determine if they are hitting key goals monthly. It is encouraged to have an independent, unbiased third party assist with reviewing the financials to ensure that reporting is accurate. This could be an accountant or even a no-cost consultant.
The analysis must look at key overhead trends such as utilities, rental space, inventory, cost of goods, accounts receivable, and employee salaries. This will help pinpoint anomalies. For example, due to government programs that were set in place to help workers who were furloughed or laid off due to the pandemic, there is a current trend of hesitancy in those workers to return to work, as some may be making more on unemployment than in some career avenues. This is creating an environment in which employers must raise salaries to attract these employees back into the work environment. This anomaly can understandably create a strain on bookkeeping. Therefore, it is advised to maintain books and track trends.
The lack of a strategic marketing plan is often an overlooked element to a struggling business owner. When there is no strategic marketing plan in place, business owners are not able to completely understand their industry, nor do they fully understand how to market their business properly. This strategic marketing plan must also be able to adapt to this post-pandemic world. There are new needs and concerns for many consumers, and these affect how they are choosing products and services. If a business owner has a marketing plan that was not successful before the pandemic, it is even more important for that owner to sit down and create a new one now.
The pandemic has led business owners to change not only the way they evaluate their business’ success but how they approach and adapt to certain anomalies thrown their way.
For example, a recent client of mine was seemingly successful pre-pandemic. She had multiple locations, two of which were struggling for the past three years. It was recommended to cut staff or possibly close the underperforming locations.
After COVID-19 happened, she received two different loans of $150,000, which helped clean up some of the issues. However, this was a temporary solution. Root issues that existed pre-pandemic were still there after the windfall of money. Ideally, she should have closed the floundering locations and focused that $300,000 on the locations that were successful pre-pandemic.
Right now, there are business owners out there who want a successful business, but they don’t know what it takes to have a successful business. They’re underperforming and they’re not bringing in the revenue it takes to succeed. Pandemic funds have only blurred their vision and given them a false sense of success in some cases.