An early and ongoing analysis of the effects of COVID-19 on small businesses in the country reflects that over 200,000 establishments have shut down permanently since the start of the pandemic. Businesses still standing have learned to adapt, but still need help.
If your business has taken the brunt of the force of the COVID-19 pandemic and you’re looking to reclaim your business, keep reading. In this post, we’ll share five crucial financial tips to help your small business recover from the impact of the pandemic.
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1. Take Advantage of Federal Relief Tax Credits
Since the start of the pandemic, the federal government has introduced relief tax credits to help out small businesses like yours. The Employee Retention Credit (ERC) helps businesses to keep employees on payroll so that businesses can keep functioning.
If you do not already have a tax professional to consult with about the ERC tax credit, don’t worry. The team at ERC Today can walk you through applying for and maximizing your ERC SBA.
2. Cut Down on Expenses
The top rule for financial management is to always strive for a positive cash flow. Spend below your means to avoid going into debt.
As most small business owners like yourself have found, business and sales have been quite volatile during the pandemic. If your business is not making as much as it used to, try to find ways to cut down on your expenses.
For example, a restaurant can forgo certain dishes where ingredients are a bit more expensive than the restaurant can afford at the moment.
3. Rebuild Your Emergency Fund
As you cut down on how much your business spends, you have the opportunity to put away money into your business’ emergency fund. Most small business owners have already exhausted this fund to get through the pandemic. There’s no better time to start rebuilding this fund than now.
A great tip for managing finances and building your business’ emergency fund is to set up automatic transfers so you don’t have to question whether you can afford to put away this chunk of money.
4. Diversify Your Income Streams
Diversifying your income streams does not mean going and starting another business. You can develop multiple income streams from one business.
For example, if you run a traditional brick-and-mortar retail store, you set up an online website to sell the same items.
Another way to diversify your income streams from one business is to come up with another product or service that you can offer. If you are a full-time freelancer selling your skills online, think about creating an online course or an e-book to market your skills.
5. Keep Detailed Records
The last financial tip for small businesses is to always keep detailed records of business finances. At the end of the year when you hand off your company finances and records to your tax professional, they can help you maximize your savings by figuring out how to lower your tax liability.
Without detailed records and receipts of your expenses, it is hard for them to do so.
Apply These Financial Tips to Your Business Today
Whether or not things go “back to normal,” we have to accept that that this is our current reality. As a small business owner, you can only focus on the present to try and bring about a more secure future. Use these financial tips listed here to help your business get back on its feet, even given our weird present circumstances.
For more financial tips and advice for small businesses, be sure to check out more from our business section!