There’s no denying small businesses and startups have taken a large blow from the economic impact of COVID-19. Business owners have suffered unprecedented losses as governments ordered lockdowns and social distancing measures across the globe. Most entrepreneurs were left with no choice but to completely shut down their businesses, but others remained resilient and emerged stronger on the other side.
More than a year into the pandemic, vaccinations continue to roll and countries are geared towards loosening their restrictions. While this is a great time for businesses to regain their footing, others are still struggling to deal with the financial losses from the pandemic.
Today, entrepreneurs are scrambling for ways to cut costs and save their businesses. Some even search for ways to check their credit scores by looking up “what is digital credit scoring” on Google to predict their creditworthiness and make smarter decisions on their finances.
Whatever financial situation you’re in right now, it’s important to proactively manage the financial aspects of your business to get a better hold of your current financial situation. In this article, we’re listing down three ways how small businesses and startups can save money during a pandemic. Take note of the following suggestions to ensure the company’s survival in these tough times.
A few months into the pandemic, businesses have been making headlines after transitioning to the remote work model, leaving the office environment for a temporary period. Although this strategy worked for most businesses, especially the large-scale ones, others found themselves unprepared or have limited resources to go fully remote.
If you’re managing a startup, it doesn’t make sense if you choose to pay for that expensive lease that no longer works for the business. Explore other commercial areas near your location or look for cities with a higher demand for the product or services you offer. If there are any available office buildings, ask the landlord if they offer affordable rent or allow flexible leasing arrangements. Once you’ve settled everything, it’s time to move to a new location fit for the business.
If you’re still seeing a lot of potential in your current location, talk to the landlord. Negotiate and request affordable rates. You can be honest by telling the landlord you’re planning to move out and look for other spaces. A landlord may want to retain you as the tenant, especially if you’re paying well, so make sure to negotiate for more acceptable terms.
Apply for assistance programs
Cutting costs in the business also comes with limitations. You can relocate to a cheaper location, go paper-free, or buy in wholesale. But eliminating utility expenses for the Internet, water, and electricity is simply impossible.
If you’re struggling to pay bills on time or finding a way to cut down current bills, consult your utility provider. Be honest about your situation and check if they can offer a discount or suggest a relief program you can qualify for. The government also offers subsidy programs for small businesses and financial assistance to businesses affected by COVID-19. Some may also provide a relief package or payroll protection if the business employs staff.
Although relief programs may be temporary, take advantage of them since short-term relief still makes a huge difference. But if you’re really short on funds, talking to your trusted bank will help you identify available options for relief, such as loans or personal mortgages.
Consider independent contractors
Having your own workforce is a great milestone for any startup or small business. It shows the business is thriving and sales are picking up. But entrepreneurs with limited resources during the pandemic may consider employing independent contractors than full-time employees.
Hiring independent contractors or outsourcing is a smart move for businesses running on a tight budget. It will allow the business owner to withhold the taxes and identify the desired terms between the business and worker. The working terms are divided into three categories: financial control (pay and wages), behavioral control (direct control on the workload), and the relationship of the parties (vacation pay, pension, or insurance).
Payroll costs, such as taxes, vacation, insurance, and retirement benefits are not required to be provided to the independent contractor. Eliminating these costs will decrease the benefits and payroll amounts by 20% to 50% every year.
While we’re still in the middle of a global crisis, it’s critical to evaluate your finances for the business to stay afloat. The pandemic offers an opportunity to make wiser decisions about employment, operations, and investments. With the right proactive measures and contingency plans in place, your business will eventually emerge strong once everything returns to normal.