The COVID-19 pandemic has hurt the global economy. With people locked away in their homes, and businesses shut down, the economic ramifications cannot be wished away. Considering that most small businesses rely on their daily revenues to pay off their debts, the slow economic activity caused by Coronavirus is likely to push them into payment defaults. If you are a small business owner and your creditors are pursuing you, you probably feel like you are at the gate of bankruptcy. It doesn’t have to be so. Here are some of the ways to protect your business from bankruptcy.
1. Adopt an Online Business Model
Our technological evolution has opened the way for virtual economies. And during this pandemic, with the brick and mortar businesses closed down, buyers are shifting to online markets. This is precisely why Amazon is overwhelmed with transactions right now. You can hire a web developer to create an online home for your business, and attract your target audience via advertisement and content marketing.
2. Collect What is Owed to You
Just as your creditors give you predatory looks, you should also go after those who owe you money. It’s time to go through your accounts receivable and demand payment from these parties. This is why businesses must invest in solid, record-keeping platforms.
3. Utilize Government Programs
You can take advantage of the Paycheck Protection Program to keep your business afloat. The main requirement is that you don’t have more than 500 employees. More than 1.6 million PPP loans have been approved. Taking advantage of this government initiative buys you time to gather resources.
4. Talk to Your Creditors
It might not work with every creditor, but it’s a commendable move nonetheless. It mainly involves persuading your creditor to reduce payments or extend the repayment window. You have to have strong persuasive skills to do it well. Considering that we are in the middle of a pandemic, creditors are likely to be agreeable.
5. Reduce expenses
When a business is in dire straits, there’s no option but to tighten the belt. Go through your expense account and get rid of the luxuries. And if your business is facing imminent collapse, you might have to cut your employees’ salary or even lay some of them off.
A business can also reduce costs by switching business partners. For instance, if you are stuck with suppliers who have high quotes, just forego them and seek out suppliers with lower quotes, and better payment terms.
The more information at our disposal, the more power in our hands; in the age of the internet, we have a solid way of digging up information to help us make vital decisions. Great decisions can easily translate into low expenses.
Many external factors influence the performance of an economy. A pandemic, such as the one we are witnessing now, can severely hurt the economy. And this forces business owners to think outside the box to avoid bankruptcy.