Small businesses are already notorious for low survival rates. The younger the business, the less statistics support their journey to fruition. And with the unforeseen impact of the pandemic, the numbers do not look any better. With some help here, we advise small businesses on aspects of bookkeeping that will increase the odds in their favor.
According to one source, 18% of businesses fail because of poor cost management. According to a U.S. Bank study, a full 82% of businesses that failed cited cash flow problems as a factor in their failure. Without:
- More loans
- Subsidies, and
- Benevolent investors
Almost half (50%) of all startups in the world will fail in the COVID-19 era. This is one of many findings by the research agency Startup Genome.
If anything, these figures highlight the importance of professional expertise. In all areas, but bookkeeping services and taxation services especially. The most experienced experts in bookkeeping and have five general rules to offer.
1. Double Down On Due Diligence
Bookkeeping has never been an entrepreneurial favorite. But in these times, the direct involvement of small business owners is important in bookkeeping. Even while working with an accountant and bookkeeper. Even if you have currently outsourced your bookkeeping to a firm which provides bookkeeping services, the importance of monitoring does not go away. Small business owners need to:
- Practice due diligence
- Monitor business costs
- Record receivables and
- Check their books regularly
To ensure accuracy and consistency. One benefit of this rigorous due diligence is that it differentiates good bookkeeping services from the very best bookkeeping services out there. A crash course in good business decisions.
2. Budgetary Efficiency
Settling on more intelligent decisions for your business covers a few things, from making a financial plan to figuring out how to arrange that plan effectively. Making a budgeting plan and sticking to it is essential when running a business. Monitoring business costs becomes simpler when there is an expenditure already in place. Business owners can also outsource this to an accounting services firm, which will create the budget for them. Financial plans enable business owners to recognize where the total cash proceeds will be most productive. Similarly, the budget identifies how well business expenses have been distributed through business functions.
3. Aggressive Revenue Management
There’s a ‘flip side’ to the crisis too. Despite the emergency, a few organizations are actually changing their business model(s) to stay afloat. Instead of table assistance, cafes are driving income via takeout and home delivery, both once considered supplementary. Now is the ideal opportunity to explore comparable alternatives and how your business model fits into them. Taking the business online has been a mode of survival for many SMBs during the pandemic. It is convenient and cost effective. Now more than ever there is a need for online accounting and bookkeeping services. Small businesses should use this time to choose the right one for themselves.
4. A Good Time To Realign Finance And Accounting (F&A) Strategy
Listing your objectives and your vision for development is important.
- Keeping a rundown of the current situation
- Maintaining long-term budgetary objectives for the organization and
- Making arrangements (with Plan B, C and D) on the best way to accomplish them
These are going to be the cornerstones of small business survival in these times.
Interest rates and other economic indicators will fluctuate once the economy truly recovers. So, preparing for the post-pandemic situation is just as important as making decisions right now. It will give businesses the flexibility to alter the course of business without suffering in the middle to long term.
5. Check Federal/State Relief Programs
Most small businesses will now require additional funds-related assistance. Luckily, there are various local, state, and federal government aid programs. Each one, propelling independent ventures to survive COVID-19. (And its aftermath).
The CARES Act incorporates various arrangements to help bolster small businesses affected by COVID-19.
experts recommend choosing a program suitable for the specific business. Some portion of the CARES Act includes extended subsidies via the SBA Economic Injury Disaster Advance Program. SBA PPP is intended to give budgetary help to small business ventures. This is to prevent layoffs.
Other aid programs are constantly emerging to keep small businesses buoyant in these hard times.
What the current situation has taught is that businesses must be flexible in conducting operations. The way employees are working from home shows such flexibility is not far-fetch or unattainable. In the same vein, there are several reliable service providers, such as Monily, that offer a unique and refreshing experience through their professional bookkeeping offerings. More than experience, it’s agility, and leveraging the right expertise that will enable small businesses survive the COVID-19 storm. With this advice, we hope to count many more businesses in that fold.