During any regular time, starting and maintaining a small business is a challenge. From developing a viable business plan, to raising capital and managing revenue and expenses, it’s no small feat. As a matter of fact, 15% of small businesses fail in their first year, while 40% do not make it past the fifth year. These statistics are even worse for women-owned small businesses, especially during the 2020 COVID-19 pandemic where they find themselves disproportionately impacted, as reported by a recent U.S. Chamber of Commerce survey. The survey reveals a 13-point decrease in female business owners’ overall ranking of their business health, as compared to a mere 5% decline for male-owned small businesses. As a Certified Public Accountant (CPA), I’ve had the privilege and pleasure to work with and learn from a number of women-owned small businesses, especially in times of economic crisis like the one we’re currently facing.
Unfortunately, the prospects for recovery for women-owned small businesses after the COVID-19 pandemic are also quite dim, with less than half of small business owners feeling optimistic about future revenue increases. However, despite the severe impact the pandemic has had on small businesses, especially women and minority-owned, there are still ways to improve future outcomes.
To this end, here are 7 best accounting tips for women-owned businesses to survive, and even thrive, during tough economic times such as the current COVID-19 pandemic:
- Determine where your business finances stand:
Knowing where you stand in your business finances is a crucial first step in times of crisis. Your cash flow statement is a good place to start for this. Using accounting software such as Freshbooks or Intuit Quickbooks allows you to keep track of your revenue and expenses, as well as your business’ main financial statements. Look at your current cash situation and find out:
If you have any cash reserves, and if any, how long you can sustain operations with these?
Which ones of your expenditures, especially cash-related, are the most essential to be attended to at the moment?
Which ones of your expenditures, especially cash-related ones, can be pushed back until you can muster enough cash on hand?
- If you haven’t already, begin the Negotiating Game with your creditors and customers
This is where managing your accounts receivable, or the money your customers owe you, comes in handy. Call each one of your customers owing you money, and find out if they can pay you any faster, thus improving your cash flows.
In the same way, you should look into getting arrangements to defer your loans and bills, or even reduce and eliminate them entirely. You’d be surprised what can be done, and how many, if not most people, are willing to help if you’re willing to negotiate.
- Trim the fat and find ways to be more efficient in your business
Times of crisis are opportunities to reframe your business and trim the fat. What expenditures can be reduced or eliminated? What can you do to operate a leaner machine, instead of bleeding cash everywhere? Should you invest in more effective processes and tools?
Take a good hard look at how you operate your business on a day-to-day basis, and don’t hesitate to cut where needed. In the same token, don’t hesitate to invest, if you can, where needed as well.
- Keep up with the changing times
Just like times of crisis are ripe with cost-trimming opportunities, they’re also full of opportunities to reposition your business. The current pandemic we’re facing is changing the very nature of business, what with the advent of remote work and social distancing.
If you’ve been operating an in-person business, repositioning it as a more virtual operation using web hosting services such as GoDaddy for instance may improve your chances of surviving and even thriving during the crisis. It may also help create entirely new streams of revenue for your business, even after the recovery.
- Determine if you need to apply for small business financing
You may decide after taking the pulse of your business finances, that you need extra money to attend to various expenses, such as buying supplies, paying your business mortgage or rent, or meeting payroll demands. The Small Business Administration website offers useful resources pertaining to Small Business Guidance and Loan Resourcesduring COVID times.
Additionally, the Coronavirus Aid, Relief and Economic Security Act (CARES) Act, implemented in March 2020, helps small businesses with loans, grants and debt forgiveness during the pandemic. Through it, you can also apply to reduce your tax liability, and/or obtain tax credits, along with more beneficial tax treatment of net operating losses, business interest deductions, and Alternative Minimum Tax (AMT) credits.
- Invest in professional development
As market trends and business prospects are changing in times of crisis, professional development becomes increasingly important to adapt to, survive and thrive in times of crisis. Getting a new certification or acquiring new skills can go a long way towards maintaining your business afloat, and even set yourself up for success in future periods.
- Don’t do this alone! Use the power of networking and mentorship
Last but not least, don’t go at it alone! Running a small business, especially in times of crisis, is incredibly difficult. This is why taking advantage of networking and mentoring opportunities is crucial!
Take some time to attend networking events, even if virtual, and continue to create new opportunities to meet and collaborate with people in and outside of your industry.
All in all, surviving and even thriving as a woman-owned business in times of crisis is possible during tough times, granted you apply some basic tips and continue to push through despite the challenges.
For more women-centered small business and career tips, visit us at https://www.thecorporate sister.com
What other tips would you add to this list?
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