A startup needs a lot of financial help to get off the ground and operate to a point where it becomes self-sustaining after a certain amount of time. Typically, this would mean raising capital, securing a loan, opening up shop, and then waiting a couple of years for your return of investment. It’s a simple process if you think about it. Or, well, it was simple.
And then 2020 happened.
The COVID-19 pandemic managed to shutter large swaths of businesses all over the country and the world. For most of the first half of 2020, major cities remained closed and under quarantine, in fear of a devastating outbreak. This left many businesses on the brink of collapse. While many took the opportunity to jump into digital commerce, their revenues weren’t the same.
As cities start to reopen, many of these businesses are starting to see light at the end of the tunnel. But with ‘new normal’ protocols in place, it’s naïve to think that things are going to be the same again. However, this doesn’t have to be a bad thing: businesses can still thrive in the ‘new normal’, they just need to rethink a few things.
Re-evaluate Your Loans
Banks and lenders have become slightly flexible with payment plans to adjust to the ‘new normal’. If you feel like you’re going to have trouble paying off loans, don’t be afraid to go to your financial institution to ask for extensions and/or a re-evaluation of your loan agreement.
Think very hard of the other loans you might get or may already have: are the terms still executable? Will your revenue stream be able to pay off the interest? Ask yourself these questions and have your accountant break down the numbers for you.
A lot of businesses rely on loans to not only start operations but to continue them as well. Gap funding for business start-ups can help re-start your company’s engines quickly, but make sure that you’re borrowing from a secure and stable funder who has access to a reputable hard money lender and that your collateral won’t be in danger of repossession.
Plan for a Long Winter
With a vaccine for COVID-19 more than a few years away, it’s safe to assume that ‘new normal’ protocols and a sluggish economy are to be expected for the immediate, foreseeable future. Frugality should be the virtue of every business owner, but in these strange times of a global pandemic, it’s now an essential value to have if you want your business to thrive in the ‘new normal’.
Re-assess all your assets, both physical and financial, and figure out which ones are generating revenue and which ones are draining revenue. Take out every non-essential overhead off your books and focus on figuring out different ways to save money, be it in closing up a brick-and-mortar location in favor of an online platform or through re-evaluating digital marketing strategies.
Yes, cities are reopening and the government is eager to jump-start the economy, but don’t let that fool you! There’s still a virus going around and spending it on non-essentials is going to hurt you in the long run. Don’t go renting out Disneyland for your employees as a way to celebrate reopening; be frugal, save every dollar and pinch every penny so you can keep your “We are Open” sign for as long as possible.
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