Businesses rely on plans. For many, 2020 was a year they could not have planned for. COVID-19 had a chilling effect on almost every sector of our economy. Consumer spending slowed to a crawl and projects were put on hold.
Shelter-in-place orders and occupancy restrictions left many small businesses struggling to find their bearings. Medical professionals, hair stylists, event producers, performers and more were hit hard as they looked for ways to provide their services safely and stay on top of their expenses.
Without plans in place to weather such a protracted economic crisis, businesses needed to be able to adapt quickly in order to survive. Those with more complete, up-to-date financial records and budgeting practices were able to pivot their operations wisely, thanks to the vital information they had available to them. Forms of assistance were offered to help with payroll and other business expenses, but only those prepared with thorough financial records and projections were able to apply in time.
Volatile market conditions demand agility from businesses to adjust their plans and set new goals. Unlike any year in recent memory, 2020 reminded us how important preparedness is to making the right decisions when it matters most.
You’ve heard the phrase, “Expect the unexpected.” Though this can seem like a paradoxical command, it is actually sound business advice.
You will, at some point, encounter abnormal circumstances that test your business. You can give yourself more choices and more freedom to adapt by building thorough financial records, understanding the profitability of everything your business does, and forecasting budget projections based on that data. 2020 proved this over and over.
The Paycheck Protection Program (PPP) was a loan backed by the Small Business Administration to help businesses keep their workforce employed during the crisis. In order to apply for a PPP loan, prospective recipients had to provide detailed records of their finances and payroll.
Applicants who were more prepared with this information were able to receive assistance sooner simply because they were ready with the information they needed to apply. The same goes for businesses applying for COVID-19 Economic Injury Disaster Loans. These low-interest EIDL loans were an important lifeline for small businesses who experienced loss of revenue due to COVID-19.
State governments, such as my own state of Nebraska, offered additional loans and other forms of assistance. Once again, eligibility and quick delivery relied heavily on each business’s own readiness to apply.
Many small business owners found themselves looking for new revenue sources, or critical cost savings. Some even had to consider closing their doors for good. Big decisions had to be made, and when that time came, financial preparedness made all the difference.
In the past I’ve talked about how your financial records can become an indispensable knowledge base for your business. Categorized profit and loss statements illuminate profitability by client, service, product, or other relevant category. They allow you to see where your expenses come from, empowering you to make necessary adjustments when market conditions change or material costs fluctuate.
Financial awareness is the key factor that determines how a business responds to a crisis. Those with less information are prone to panic as they struggle to find their way forward. Meanwhile, businesses with complete, reliable financial records can make conscious decisions based on that data, and easily realign their goals with the realities of that moment.
I’ve been asked when I think things will go “back to normal”. Although we see signs of recovery, the truth is there’s no going back to a pre-2020 mindset.
Many industries are experiencing a slow rebound, with volume and profits still lagging behind pre-2020 trends. Material prices are still high and supply chains are still trying to catch up to demand. Right now, businesses need to be extra-attentive to their cash flows in order to make smart plans.
With all the ways 2020 surprised us and made business especially difficult, some may have an uncommonly complex time reporting their taxes. Those with access to professional financial services will see an advantage here too.
Here’s what you should know: No year is completely predictable. The same financial awareness that determined the fate of businesses during this economic crisis can help to maximize profits during periods of growth.
Simply put, don’t wait for another emergency to hastily organize your records. You can put processes in place that keep you perpetually prepared to make major decisions and enhance your everyday operations. Smart business operators are getting their records cleaned up, and gathering information for the hard choices ahead.
You can gain valuable insight into your future with professional financial analysis based on a comprehensive understanding of your business cash flows.
Remove the burden of uncertainty! Lacking information can make you feel helpless. When the success of your business and team rely on your ability to adapt, make sure you have the information you need to find a way forward.
Design informed business plans based on accurate data. Put processes in place that will feed your database and provide the key information you need to plan.
Advantage Insights offers services designed to provide optimal financial awareness for small business owners. With my Financial Management services, I work with clients to design a program that addresses their unique needs and goals.
Up-to-date, thorough financial data will revolutionize the way you make decisions for your business. To learn more about Advantage Insights Financial Management services, including Advisory Services, Full Bookkeeping, and Virtual Financial Management, visit our website.
And if you want to see the difference professional financial services can make for your business, don’t hesitate! Reach out for a free consultation. For more information, call 402-281-3785 or email firstname.lastname@example.org.