Published by FrankNez Team.
The time of the financial crisis during the pandemic forces us to reconsider the company’s strategy and look for new incentives for development.
With proper resource planning, this time can be a new stage for realizing opportunities.
You can optimize business processes, facilitate the acquisition of new partners and implement new tools for better financial returns.
For this, you can choose software for online conferences, electronic accounting of finances, or tools from the list on data-room.ca.
The viability of the company will depend on your decisions during this challenging time for business.
We will tell you how to survive the financial crisis during Covid.
Financial Control is Your Lifeline
Most entrepreneurs do not separate personal finance from business finance.
And this is a big mistake.
One of the most common causes of bankruptcies in small and medium-sized businesses is the waste of capital.
Money should work for you constantly, but if this does not happen, then it does not bring any benefit and disappear.
This approach threatens both the stability of the company and the financial security of the businessman’s financial resources.
Separation of cash flows is necessary to:
- see the financial result from the business;
- control the costs of the enterprise;
- discuss current issues through dataroom software;
- minimize the risks of financial loss;
- ensure transparency of transactions in the interests of partners or investors.
To maintain a clear distinction, the head of the company must record all amounts invested in the business.
You can use these finances for personal purposes only after the profit for the past period has been calculated.
Some executives are wise to use mobile or desktop software to control and share finances.
This will help visualize the current financial position of the company and adjust expenses.
Building Financial Reserves
Often all the income received by the enterprise goes to cover current costs.
It is extremely important during a financial crisis to have some financial backup to ensure the performance of the company.
In this way, you will be able to recover from unforeseen situations and have the resources to grow and develop your business.
Below are some ways to keep financial reserves for use in a crisis.
|Bank account||It is optimal if you use a deposit account that will bring additional income. Use insurance to secure the deposit in case of any accidents.|
|Exchange investments||Reasonable investments in shares of other companies as a way of investing and creating reserve capital.|
|Diversify in multiple ways||You can keep some of the money in a savings account, invest some in stock shares, and some in a safe deposit box. We recommend using a data room to store and record financial data and reporting.|
Keep in mind that the reserve fund should be enough for 3-6 months of unprofitable existence of your business.
This amount can be used to pay rent, pay salaries for employees, or purchase goods.
Also, the financial reserve will help with the rapid expansion of the company – when you need to purchase more goods than usual, hire new employees, and buy equipment.
It is better to form such a reserve at the stage of starting a business, and then replenish it by 10-20% of the profit.
Next Step — Cost Adjustment Strategy
The key factors for successful financial management in a crisis are regularity and consistency.
To do this, you need to ensure that important data is not lost, which is quite difficult when working on paper.
Virtual Instruments help facilitate this process but must undergo VDR due diligence.
If you properly organize the accounting process from the very beginning, when there are still few numbers, it will be easier to control this as the business grows.
However, even in a large company, such digital tools should not be neglected, especially during a pandemic.
In critical situations, it is important to continue to count and analyze cash flows, as well as adhere to the following tips:
- Adjust financial planning. Business owners should consider several scenarios for the possible development for each of the cases.
- Create a reserve fund. As we said earlier, this is an important point for minimizing the consequences of the financial crisis.
- Review expenses. To survive the forced financial crisis, it is necessary to visualize the company’s current expenses and store up-to-date data in one of the virtual data rooms.
In crises, it is often the best option to make personal decisions on each transaction and cost item.
In such cases, planning helps a lot, including short-term planning: for example, drawing up a payment plan for the day or week.
Virtual services for data storage at the same time help to exchange information with employees and partners.
After you can analyze the causes of the crisis, you will be able to solve systemic problems, for example, seek additional funding.
Expansion of the Company’s Activities
In addition to monitoring the financial performance of their business, a businessman must be able to analyze data and make decisions.
Using an electronic data room is the best option for visualizing information and sharing data with business partners.
After delegating certain areas of your company’s activities to specialists, it would be wise to reconsider the sphere of influence of your business.
In the context of the pandemic, the demand market has moved to the virtual space, so it is more expedient to develop in this direction.
To expand the activities of the company during Covid, you should:
- study the current needs of the target audience.
- consider opportunities for business restructuring;
- implement data room services;
- use additional financial resources to open up new opportunities.
To stay afloat, it is enough for the owner of the company to minimize financial losses.
However, to take advantage of the crisis and new opportunities, an entrepreneur must be able to embody several roles in business at once.
This includes conducting business negotiations, searching for suppliers, developing the company’s social networks, etc.
At first glance, it may seem that such information is too much for one person, but it is not really true.
Conduct a data room comparison and you will be able to keep records of data in the virtual space simply and efficiently.