When you started your business, you navigated a host of financial challenges, from raising capital to managing cash flow. Now, as you work to meet shifting demands for your goods or services or you reopen a business that has been shuttered for weeks or months, you’re facing some of those same issues again. This time, however, the global crisis may have changed your options or the way you are able respond.
1. Funding to restart.
When you opened your business, you raised capital to start operations. You may have been like the nearly 80 percent of entrepreneurs who self-finance their endeavor. And, this isn’t surprising because a key characteristic of an entrepreneur is the willingness to take a risk. You may have also relied on support from family members, friends, or other individual investors. Or, you may have borrowed from a local financial institution or government agency that supports small business.
While it’s true that many of these options are available to you again as you reinvest in your business, today’s economic environment may mean you need to rethink your approach. Strategies for saving capital can be a good place to start.
For example, if your workplace—and workforce—has shifted to accommodate today’s new ways of getting the job done, like working from home or expanded ecommerce, capital investments in technology to support dispersed operations may be essential. Does the technology you purchase have to be new?
One way to save valuable capital is to invest in Cisco Refresh, Cisco’s certified remanufactured equipment program. Cisco Refresh has thousands of products in stock right now and ready to ship. These products are backed by the same Cisco warranty and service support options as the equivalent new product. You can get the quality technology you need at significant savings. The bonus: using remanufactured equipment allows you to minimize your environmental impact. And, you can even return used equipment to support a more sustainable economy. (If you’re in the U.S., check out the Takeback and Reuse Program.)
Another approach that can shift capital expenses to operating expenses as you’re reopening business is to consider working with a managed service provider or your Internet service provider. You pay for only the technology you use each month, so the utility-like expense is predictable. Plus, if you work in a highly regulated industry like healthcare, you can be assured that you meet industry and government mandates.
Finally, take advantage of promotions and free trials whenever possible—to try before you buy.
2. Managing your cash flow.
Managing cash flow is a perpetual struggle for most business owners. According to the 2019 Small Business Trends report, 33 percent of small business owners cited a lack of cash flow as their greatest challenge.
Managing cash flow starts with a careful analysis of your accounts payable and accounts receivable processes. Cash flow is the total amount of money being transferred into and out of your business, but the timing of your payments and receipts is important too. Protect your business’s credit rating by always paying on time, but extend that payment window for as long as possible. When you’re able, consider asking your clients to pay more quickly, reducing the window from 30 to 15 days, for example, or offering incentives to those who pay more quickly, such as within seven days.
At the same time, when you do need to invest, look for financing programs that offer built-in capabilities to assure successful cash flow management. For example, Cisco Capital can help you secure the technology you need to run your business with regular, predictable payments, often with interest rates as low as 0 percent. You can eliminate upfront costs to preserve your cash for other business priorities and always know exactly how much you’re spending and when—a real benefit as you work to reopen your business.
3. Attracting and retaining the right team.
Whether your business has a staff of two or 102, it can be challenging to build the right team and ensure employee satisfaction. As you reopen your business, it’s hard to predict what this current job market means for new hiring or employee turnover, though one factor will likely remain true. Most small businesses can’t afford the competitive salaries or comprehensive benefit packages offered by their larger counterparts.
Adaptability is key. For some employees, a profit-sharing arrangement, the promise of owning a “piece” of the business in the future, may be appealing. Other prospective hires may find value in the chance to build their own entrepreneurship skills within your enterprise. Can you promise an environment that encourages innovation and welcomes new ideas? This may attract hires who are passionate about your industry and excited to find creative new ways to work.
In addition, many small businesses can be uniquely flexible in how they operate. Some prospective hires looking for a more meaningful work-life balance may be willing to trade a higher salary for the chance to set their own hours, bring their dog to the office, or work from home. It requires careful thinking on your part, however. You need to decide how flexible you’re able to be, and make sure your employees always know what you expect. A plus for you? Being flexible may mean you’re able to build a talented team, regardless of where they live and work.
4. Expecting the unexpected.
It won’t surprise you to know that 35 percent of small business owners cite unforeseen expenses as their main financial challenge. Whether it’s loss from theft, a weather-related business disruption, broken equipment, or a cyber-attack, the expenses you can’t predict can wreak havoc on carefully laid plans.
You may believe, for example, that a cybercriminal won’t pay attention to your business. Unfortunately, as large organizations ramp up security to protect against threats, small businesses have become tempting targets. In fact, nearly 50 percent of all cyber-attacks are aimed at small businesses. This is more than the data breaches faced by public entities and financial and healthcare organizations combined. And for a small business, a major security breach can be fatal. Digital incidents cost businesses of all sizes $200,000 on average, and sixty percent go out of business within six months of being victimized.
If you’re like a lot of small businesses, you may be operating with a small—or nonexistent—IT staff. Effective cybersecurity can seem out of reach. This can be especially true as you’re reopening business. In truth, the right combination of firewalls, endpoint security, and cloud security curated for small business is the basis for an effective, unified security system.
5. Making marketing work for you.
You compete with large organizations for capital, employees, and customers, but you have advantages too. When it comes to marketing, and particularly social media, few large businesses can be as agile as you can. It certainly takes time, but it’s a chance to market your business that you can’t afford to miss.
Your customers are spending more time online looking for information. Connect with them—and grow your business—with a creative social media presence that sets you apart from the competition. Listen and engage to build community and make your business more human. Earn your customers’ trust with compelling, honest content. Learn more with this great resource from LinkedIn.