When managing our business operations in times of economic instability, we tend to focus on the expense side of the equation. We ask ourselves: Where can we cut costs? Is this a necessary purchase? Can we negotiate a lower fee? The revenue side can easily get overlooked. But just like our cash outflows, we can tweak our cash inflows to help our businesses survive – even in the midst of a once-in-a-lifetime global pandemic.
Rethink Your Business Offerings
We’re living under new rules now, and the truth is that your business may not be able to offer the same experiences, services, or products that it did before the COVID-19 pandemic. Business innovation is at an all-time high and many businesses have already adapted their service models. If you haven’t already done so, explore new or different ways to make money, such as:
- If you own a restaurant that provides upscale, in-house dining experiences to customers, think about how you can capture those sales differently. Can you offer grab-and-go options that are made to order with a special note from the chef?
- If your business provides in-person classes, can you stream your classes or move them outdoors?
- If you install equipment in customers’ homes, can you shorten installation times or offer same-day repairs to encourage customers to use your services?
- What need is going unmet of your customers?
You don’t need to reinvent the wheel, but it’s important to challenge your assumptions about how you do business. For instance, check in with your sales managers to see what’s been selling well. If a segment of your business has held steady during the pandemic while another has waned, pull back in one area so you can focus on the other.
Improve the Customer Experience
Meet your customers where they are most comfortable. You’ve already spent time and effort building their trust, so putting in a bit of extra effort to make them happy will pay dividends. For folks hesitant to interact with your business as they normally would, you could:
- Offer touchless service delivery.
- Upgrade your cleaning and safety protocols.
- Increase the capacity of your phone lines to connect with customers from a distance.
- Invest in video conferencing software to provide virtual services.
Your existing customers are a known quantity; selling to them will come at a much lower cost than soliciting sales from new customers. And if you keep them abreast of your changes, they can mentally prepare themselves for the new experience and will have fewer reasons to stay away.
Collaborate with Other Businesses
When you unite with other business owners in your area, a few things can happen. First, you gain the ability to crowdsource solutions. For example, when your state or local government issues new orders, you and your collaborators can think of unique solutions that much faster. Second, you can expand your reach to customers who may not have found you before. If you connect with the right businesses, you can share customers without undercutting your own sales. And most importantly, collaborating locally boosts your neighborhood economy, giving you more influence over policymaking.
Improve Processes Surrounding Cash Collection
This pandemic has highlighted the importance of having fast access to cash. To accelerate your cash flow, focus on your cash collection process. You can improve cash collection by:
- Following up on unpaid invoices promptly
- Offering discounts for payments in full, early payments, or ACH payments
- Accepting different forms of payment to make it easier for your customers to pay
- Refining accounting or reporting procedures so you can invoice more often
- Revise billing procedures to take less time
Each of these changes will shorten your cash conversion cycle and get you the cash as quickly as possible.
Seek Cash Infusions Elsewhere
Creating new sales opportunities, improving existing revenue streams, and accelerating cash collection can all help a business succeed, but don’t overlook external cash infusion opportunities. Though many of these options will only improve cash flow temporarily, you can use them to your advantage and endure the economic instability you’re facing. A few options for you to consider are:
- Paycheck Protection Program (PPP) loans
- Economic Injury Disaster Loan (EIDL) program loans
- State or local loan programs
Mississippi, for instance, allocated $300 million to help small businesses affected by COVID-19.
- Lines of credit
Use your line of credit if you have it and ask your bank if yours can be raised.
Talk to your lender about refinancing a loan or mortgage.
- Altering lease agreements
Ask your lessor for an abatement of late fees, or see if you can lower your payment in exchange for extending the lease term.
Is maximizing revenue a realistic goal during a pandemic? Absolutely. Together with expense reduction, you can improve your cash position and find success even in an uncertain economy. If you want to talk to our advisors about your operational changes or brainstorm ideas for how to implement some of these techniques, contact your CRI advisors today.