The Most Valuable Asset To Your Business During COVID-19 Is A Financial Consultant.
As a business owner, I hope that you are noting the hard lessons about survival, managing financial risk and decision-making that this pandemic has forced us to learn.
The COVID-19 pandemic, or “Rona”, has greatly disrupted small business. One silver lining is that those who learn from this will emerge prepared to rebuild and fortify their financials against whatever the future holds.
Over the next few weeks, I will discuss 10 major lessons from COVID-19 that small business owners need to know right now and give strategies to adjust your financial practices and rebound post-COVID-19. They are:
§ Keep a financial expert on retainer regularly managing your numbers so you can move quickly to access financial relief.
§ Know your numbers.
§ Revenue is Vanity. Profit is Sanity. Cash flow is Reality.
§ If Cash is King, Savings is Queen! 3-6 months of emergency savings is not enough anymore.
§ Not all credit is bad credit. To some it’s expensive cash, to others it’s insurance or a lifeline.
§ Prioritize needs over wants, Especially during crisis
§ Make decisions based on commitment to your vision, then be flexible with how you get there.
§ Choose a bank and a business banker that advocate for you.
§ Large banks are accessible, community banks are reliable.
§ Keep important docs handy!
Let’s start with the first lesson, shall we?
Keep a financial expert on retainer regularly managing your numbers so you can move quickly to access financial relief.
The coronavirus pandemic created a situation where ready access to accurate financial information was critical to a businesses’ chances to stay alive. If you didn’t move quickly to figure out if the EIDL and PPP loans were appropriate or prepare the right financial documentation, you missed the boat.
As an outsourced CFO, I ensure that my clients’ books are complete and in order with accurate financial statements. This allows management to make critical decisions and have quick access to information.
When the economy began to shift, many business owners were scrambling to decode the SBA and Treasury application instructions, figure out what information to submit and follow updates. With nowhere to turn, they ran frantically to their CPAs for information.
Were you prepared to apply for crucial funding?
Many businesses did not have their financials organized to easily report things like gross income, cost of goods sold, a schedule of liabilities and outstanding payroll by month by employee. Business owners joined numerous webinars and roundtables looking for guidance, help and clarity.
To me, this indicates that they did not have a reliable financial officer on their team to maintain their books, manage all the financial stuff and keep a pulse on their performance leading up to the pandemic.
When it came time for the CEO to decide whether the EIDL or PPP loan made sense or access financial information, they were not equipped.
The value of a financial expert.
Imagine that you had a financial officer on your team that made sure your books and financials were up to date and readily accessible.
This person would have the expertise to decode the SBA FAQs, Interim Final Rules and loan details. And they would advise you on whether the PPP loan and/or EIDL loan made sense for your business.
The best part is that your financial officer and CPA would work together to iron out the details and simply report the best course of action.