No matter how well-managed your business is, you never know when a crisis can hit and throw a wrench in your finances. Today, the coronavirus is taking the world by storm. Businesses are closing, employees are working remotely, and COVID-19 patients are flooding hospitals. During this tumultuous time, businesses are struggling, stocks are dropping, and uncertainty and putting everyone on the edge of their seats.
Whether you’re a small business or in charge of a large corporation, you need to have a solid plan put in place to navigate crises like the global pandemic we face today. Below, we’ll cover financial planning tips businesses should implement during a crisis.
Create a crisis management team
Implementing preventative measures is a great way to ensure you’re prepared for a crisis. A crisis management team does just that. Your crisis management team should consist of representatives from multiple departments and backgrounds. This way, every aspect of your business will have a stake in how the crisis is handled.
For example, have a leader from your wealth management team, marketing team, legal team, human resources team, and public relations team work together to offer different viewpoints. Then, they can come together and devise a plan that consists of a series of actions to take to manage the crisis.
Devise a crisis management plan
Once you have a crisis management team formed, they’ll be able to devise a crisis management plan that outlines how to manage finances during a crisis, along with other operational aspects of your business. Your crisis management plan should detail the exact response to the crisis and the actions your company will take. A crisis management plan isn’t just for one type of crisis, though. Your crisis management plan should list all possible scenarios your company can face and different responses to each crisis.
Get businesses interruption insurance
COVID-19 is changing how we work. Employers are either closing their doors, requiring their staff to work remotely, or laying off or furloughing part or all of their staff. To prevent your business from going under, you might want to consider business interruption insurance. Business interruption insurance can cover major events that result in economic losses. While not all insurance companies will offer this for the coronavirus pandemic, it’s worth having incase similar scenarios occur in the future.
Get federal assistance
There are numerous loans you can use during an emergency, one being federal loans. Getting federal assistance during a crisis can help your business stay afloat and pay employees. In fact, the federal government signed a $2 trillion stimulus bill that’s meant to help small businesses and individuals get through this pandemic. Some federal assistance you can apply for include:
- Paycheck Protection Program (PPP): The U.S. Small Business Administration created the PPP to offer $350 billion to small businesses for them to retain their staff and keep them on payroll. With PPP, small businesses can apply for low-interest, government-back loans from private banks that can cover up to two months of their monthly payroll Even better, these loans can turn into a grant and have all or part of the loan forgiven if the businesses keep their employees on their payroll for at least two months after they receive their funding and use 75 percent of their loan for payroll costs. Small businesses with 500 or fewer employees are eligible.
- Economic Injury Disaster Loans (EIDL): The U.S. Small Business Administration offers low-interest loans that come directly from their administration rather than a bank, and can loan up to $2 million to small businesses that are suffering major losses from a disaster. During this pandemic, Congress is providing businesses immediate advances up to $10,000, which don’t have to be repaid.
Make a long-term plan
Another important aspect of financial planning during a crisis is creating a long-term plan. While the curve is flattening in some areas of the country and the world, coronavirus is still rapidly spreading throughout the world. Getting back to business as usual can take a while, which is why you need a long-term plan that outlines how your business will operate for the upcoming months.
Long-term financial plans are an important element of a successful business. For example, create a routine with your employees and host weekly video calls that allow you and your staff to communicate with each other and get some face-to-face interaction. You should also create a financial plan. Cut any unnecessary costs and make a clear trajectory for how you’re going to retain clients and generate revenue.
The coronavirus is causing financial troubles for businesses across the world. To ensure your company survives this global panic, implement these financial planning tips that should be implemented during a crisis.
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