Small Businesses: Staying Afloat in a Crisis
Small Businesses: Staying Afloat in a Crisis
In crises, practically all businesses are affected as demand for things decrease, and uncertainty rises. Small businesses may be hit especially hard as they operate on a smaller scale, and may therefore have lower reserves to rely on when things get tough.
In these times, here are a few things that you can do:
Inject Capital and ride this out - the owners/shareholders of the business can try to inject cash in to the project to keep the business going till it's back to business as normal
In these times, here are a few things that you can do:
Inject Capital and ride this out - the owners/shareholders of the business can try to inject cash in to the project to keep the business going till it's back to business as normal
Get a credit Facility - you can take a loan if you are having cash flow difficulties. The government recently introduced the COVID-19 Recovery Scheme. The stimulus package allows businesses to take loans to help them deal with the effects of COVID-19, and to reduce the economic impact of it.
The loans are being handled by Bank of Maldives and SDFC, with different categories handled by each. You can see the eligibility criteria and the details in the announcement released by the Ministry of Finance here
The loans are being handled by Bank of Maldives and SDFC, with different categories handled by each. You can see the eligibility criteria and the details in the announcement released by the Ministry of Finance here
Take your business online - now that customers can't visit your shop in person as easily, maybe it's time to take your shop online and begin delivering. Or if you run a creative business like photography for example, instead of taking pictures of people, you can try to focus on products for businesses - maybe for the businesses that are going online. Try to innovate and adjust the products and services you offer to suit the current situation.
Cut down on expenses - only re-stock bestsellers these days. Ask for a lower rent during the lockdown period if possible. If you usually outsource some parts of business, try doing them internally if possible or postponing these projects.
Negotiate Credit Terms with Suppliers - you could try to negotiate some sort of payment plan whereby you pay them for the goods a bit later. Then you can make the payments after you have made some sales and therefore have cash on hand.
Get Bookings for later - if you operate a guesthouse or a hotel, perhaps you can offer promotions for later on in the year. This way you can improve your cash flow for the time being, and provide those services later when things have settled. If people want to cancel bookings, suggest they postpone it instead. Just make sure you can handle this influx when you do open again.
Get a partner - if you are worried about being unable to continue operating, maybe you can consider looking into finding a partner for your business. There may be people who are willing to invest now and then get a share in the business later. A partnership can be a good idea if you are unable to or unwilling to get a loan, and you are concerned that you cannot stay afloat on your own. Just make sure that you are getting into business with someone trustworthy that you know you can work well with.
Talk to your bank about payments of any existing loans - some banks offer moratoriums that allow you to delay payments of existing loans. Check the schedule and see whether you can meet the later payments if you decide to delay the existing payments, and decide what to do.
Advertise - if you are not that well-known yet, but your products are likely to be in demand these days, you could advertise to make sure more people know about your business. Just as before the crisis, advertising can help you get more customers. Now that everyone is home, they are more likely than ever to see online ads and posts. You can advertise your posts by officially paying to advertise them on the platforms. You can also share your posts online and encourage friends, family, and loyal customers to share your posts on social media. This way, you don't necessarily need to spend money on it.
Cut down on expenses - only re-stock bestsellers these days. Ask for a lower rent during the lockdown period if possible. If you usually outsource some parts of business, try doing them internally if possible or postponing these projects.
Negotiate Credit Terms with Suppliers - you could try to negotiate some sort of payment plan whereby you pay them for the goods a bit later. Then you can make the payments after you have made some sales and therefore have cash on hand.
Get Bookings for later - if you operate a guesthouse or a hotel, perhaps you can offer promotions for later on in the year. This way you can improve your cash flow for the time being, and provide those services later when things have settled. If people want to cancel bookings, suggest they postpone it instead. Just make sure you can handle this influx when you do open again.
Talk to your bank about payments of any existing loans - some banks offer moratoriums that allow you to delay payments of existing loans. Check the schedule and see whether you can meet the later payments if you decide to delay the existing payments, and decide what to do.
Advertise - if you are not that well-known yet, but your products are likely to be in demand these days, you could advertise to make sure more people know about your business. Just as before the crisis, advertising can help you get more customers. Now that everyone is home, they are more likely than ever to see online ads and posts. You can advertise your posts by officially paying to advertise them on the platforms. You can also share your posts online and encourage friends, family, and loyal customers to share your posts on social media. This way, you don't necessarily need to spend money on it.
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