Millions of Americans have been left unemployed over the past half-year and are subsequently struggling to cover their bills and keep a roof over their heads. And for business owners, the situation is even more precarious. Unfortunately, despite fewer (if any) customers coming through the doors, businesses still have overhead that needs to be covered. Even those able to move some operations online likely still have had to contend with rent, utility and insurance costs and other financial obligations.
Additionally, some businesses may be obliged to cover the costs of supplier contracts even though they may not be able to use the items. For example, according to Reuters, the international clothing store Primark has committed to pay its suppliers $461 million for orders, despite all of its stores closing their doors in March.
Even though there have been provisions for businesses to defer payments, once they start trading again, these payments will need to be made. All of this adds up to a massive amount of financial stress for any business.
The Signs of Financial Stress
There are a number of signs of financial stress, and many of these have been exacerbated by economic shutdowns. These include:
Managing Other People Amid Financial Stress
In addition to dealing with the financial pressures, you will also need to ensure that you are managing your team. Whether you have had to furlough staff or have made arrangements for them to work from home, you will need to maintain a working relationship, so you can call them back once things start to return to normal.
There are a number of strategies to manage other people during this period of financial stress. These include:
How to Identify The Necessary Adjustments
There is no doubt this is a challenging time. In fact, according to the Business West Chamber of Commerce in the UK, just 16 percent of the businesses questioned believe they can cope should these circumstances last for more than six months. That’s why it’s crucial that you can identify the necessary adjustments you should perform. This should include:
Most SMEs appreciate that the market is never stagnant, so they are often prepared to make adjustments to plans. However, the current situation has highlighted the importance of identifying where you can make changes now.
Strategies to Deal With Financial Stress
Fortunately, there are some strategies to help you to deal with financial stress:
It seems like no business is immune to present economic conditions, as even global companies have lost a significant percentage of their turnover. According to Visual Capitalist data, the Disney Corporation has lost 31 percent in its value, while Delta Airlines has dropped from a value of $37.5 billion to $17.8 billion.
So it is crucial for SMEs to take action to deal with this financial stress and weather the current economic storm. There is no point in sticking your head in the sand. Now is the time to take an honest look at your business to work out where you can make changes to streamline your operation.
By: Baruch Silvermann– Entrepreneur, Investor, Analyst