Always adjust your budget to reflect your current income. For the essential costs, find ways to minimize them. One such approach is by taking advantage of digital marketing tools.
The COVID-19 pandemic caught both businesses and people off guard. And, from the look of things, it is going to drag on for a while. How is your business coping? Are the events affecting your business budget for the rest of the financial year? Note that, in times of such distress, companies must adapt to the new norm to get through the turbulence. Then, here are some financial tips to help you manage your budget.
Trim Your Budget to Reflect Your Current Income
Have your revenues taken a hit from the pandemic? Then, trim and redirect your spending to cost centres that are still generating sales. That is, if there is a 50% drop in sales, cut your spending by a similar percentage or more. For example, if you operate a retail store, your foot traffic may be low due to the quarantine and social distancing. But, online shopping is at an all-time high. Then, reduce your focus on door-to-door deliveries instead. For an overall perspective, a small business spreadsheet for income and expenses can help you pinpoint the areas that need drastic measures.
Take Advantage of Digital Marketing Tools
Did you know that you can cut on your marketing budget if you stay up to date with new digital marketing trends around the world? As you shift your business to an online marketing strategy, take advantage of blogging, social media, email automation, and analytics tools to increase traffic to your shop. For example, HubSpot Sales, Hatchbuck, and ActiveCampaign are email automation tools that will help you cope as you run your business with most of your staff on leave.
Have a Money-Saving Mindset
When you have a frugal mindset, you will make use of every opportunity you have to cut costs. Here are examples.
- Outsource your non-essential processes. That way, you will only pay for the services that you need. Also, it is now possible to pause your expenses on the months that your sales cannot support such processes.
- Opt for independent contractors instead of permanent workers
- Seek tax incentives and deductions
- Reduce your debt finances at the earliest opportunity
Restructure Your Short Term Capital Needs
When your income reduces, think of ways to reduce your short term debt obligations. In particular, talk to your financiers and restructure your loans. This way, you can push forward your loan repayments to a date when you expect to resume your normal business operations.
Take a Business Interruption Insurance Coverage
As most economic sectors continue to feel the impact of the coronavirus, business disruptions pause a significant threat to startups and small businesses. In particular, you now have to slash your business hours or close your showrooms temporarily as per the government directives. Also, if you rely on supply chains from companies that are worst hit by the pandemic, you will experience this ripple effect. Hence, even as you strive to bring in the orders, you may not be able to fulfill them in good time.
A business interruption insurance policy can provide you with some relief by compensating for:
- Direct physical losses including, contamination of products
- Damage to property
- Health care expenses
- Loss of income due to the mandatory closure of business premises
Still, your claims against this cover are subject to the terms and conditions of the policy. Hence, talk to your insurance agent to understand the kind of protection you are getting.
Then, always adjust your budget to reflect your current income. For the essential costs, find ways to minimize them. One such approach is by taking advantage of digital marketing tools. If you are servicing debt that is now eating up all your cash flows, talk to your bank. They will give you suggestions on how you can stay up to date with your payments without going bankrupt. Finally, take adequate insurance cover. If the pandemic takes the worst turn, such policies can help you to stay afloat.