5 tips to get back on track
Your business budget puts you in control of your business. It helps you avoid overspending and keep track of financial goals. But with the coronavirus on the rise, you may have had to throw your business budget out the window to stay afloat. To get your business budget back on track after the coronavirus, you may need to make some changes.
5 ways to adjust your post-coronavirus budget
Business owners across the country have halted operations and seen their cash flow decline thanks to the coronavirus. As states lift home orders and day-to-day operations return to normal, businesses will need to adjust their budgets to accommodate the new normal.
Use the five tips below to get your business budget back on track after the coronavirus.
1. Pay attention to new numbers
Chances are, your business has been affected by the coronavirus in one form or another. Maybe you had no choice but to temporarily close your business due to new regulations. Or maybe you’ve made the most of a bad situation and found a creative way to keep your cash flow coming.
Either way, your income has likely seen some changes over the past few months. Because your cash flow may be different than it was before the coronavirus, now is the best time to rework your business budget and make any needed adjustments.
If you have experienced a drop in your income during the coronavirus pandemic, you will need to factor that into your budget. And to help bounce back from negative cash flow, you may need to make sacrifices, such as cutting back on unnecessary spending and cutting back on expenses.
If your cash flow has not been negatively affected by the ripple effects of COVID-19, you should still consider looking at your numbers to make sure that your expenses will not exceed your income. Track your finances in your accounting software or books to see where you are.
2. Use financial forecasts
Wouldn’t it be great to be able to predict the future of our businesses? Of course it would be. But unfortunately we can’t. What we can do what business owners plan on when it comes to our budgets and cash flow.
If you’ve never heard of financial forecasting before, here’s a quick rundown. Financial forecasting can help you estimate the future financial health of your business by reviewing past financial data and reports. Forecasts can help you estimate your business’s income, expenses, and more. Not to mention, they can develop projections for profit and loss accounts, balance sheets and cash flows.
Forecasting can get your business back on track financially and help you budget. And it can help you change your budget plan after the coronavirus and better prepare for potential future emergencies.
3. Reassess your emergency fund
Does your business have an emergency fund or cash reserve? According to one study, only 60% of individuals have at least $ 400 in the bank for emergency expenses.
While business emergency funds can be tempting to tap into non-emergency situations, they are necessary for your business. The truth is, you never know what kind of emergency might be hitting your business. None of us entrepreneurs could have predicted this whole coronavirus pandemic. Heck, no one could have.
If you have an emergency fund, great! There’s no better time to reassess your funds to make sure you’re prepared for another disaster. On the other hand, if you don’t have the funds in place, it’s time to get dizzy and put some of your budget aside for the unexpected.
Take the time to create or rebuild your business emergency fund. If you didn’t have emergency funds before COVID-19, create one ASAP so your business is prepared for the worst. The general rule is to have a cash reserve that covers three to six months of expenses… so save!
4. Prioritize debt repayment
A number of coronavirus loan options were created to help small businesses struggling during the coronavirus. While some loans are forgivable, others are only partially forgivable and some are not forgivable at all. Even though you may not have been able to qualify for a coronavirus loan, you may have been forced to borrow funds due to the pandemic.
If you had to take out payday loans from Greenday or borrow money during the crisis, you are not alone. And unless you got a fully repayable loan (and used it for qualifying expenses), you may have racked up debt.
To avoid being in debt for many years, prioritize paying off your debt as soon as possible. Make room in your budget for additional loan and debt repayments (trust me, you can make room if you need to). Of course, you should always make necessary business expenses and your emergency fund the first priority of your budget. So don’t put them aside just to pay off your debt sooner.
To help you pay off your debt and get your finances in order, focus on paying off one debt at a time and set an end goal.
5. Examine your financial goals
If you’re like many others, the coronavirus has forced you to rethink your budget and the financial goals you should be working towards.
Take a look at your current financial goals and budget and ask yourself if they match up with each other. If you had to make drastic changes to your budget due to the coronavirus, you may need to adjust your future financial goals to take this into account.
Your budget should reflect your priorities and financial goals. If not, you may need to reconsider your goals and dig deep to think about how you can achieve them after surviving the coronavirus crisis.