As we begin to see the impact of the coronavirus on the economy, the current and future forecasts are pretty glum. The predictions are that unemployment will be high into 2022. This means less consumer spending, thereby, less business orders.
By now most of you have applied for some type of assistance from the stimulus package. If you are uncertain if this is available to you, please call me.
A defensive posture is called for to reduce financial stress.
Some ideas to reduce financial stress from COVID-19
Reduce or curtail spending. At least capital spending. In particular, any non-essential spending.
Be aggressive in collection efforts, as there will be quite a significant number of customers that will have difficulties in paying their bills. Give new thought to credit levels that you are extending and when appropriate collect current financial data on large customers or large orders. Consider collecting a deposit on large orders.
Analyze payroll. Non-essential personnel should be closely monitored to avoid costs that can be forgone.
Reduce production and inventory as dictated by demand.
Evaluate your suppliers to see if they are stable.
Renegotiate leases and loan debt service when appropriate.
In some cases, to maintain your workforce, salary reductions may have to be instituted.
Some of my clients are seeing more online consumer orders; evaluate your online website offerings.
Going forward, we may have to re-invent our businesses, at least our marketing efforts.