Your business budget puts you in control of your company. It helps you avoid overspending and track financial goals. But with the coronavirus in full swing, you may have had to throw your business budget out the window to stay afloat. To get your business budget back on track post-coronavirus, you might need to make some modifications.
5 Ways To Adapt Your Budget Post-Coronavirus
Business owners across the country halted operations and saw a decrease in cash flow thanks to the coronavirus. As states lift stay-at-home orders and day-to-day operations return to normal, businesses will need to adapt their budget to account for 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 impacted by the coronavirus in some shape or form. Maybe you had no choice but to temporarily close your business due to new regulations. Or, maybe you made the best out of a bad situation and came up with a creative way to keep your cash flow comin’.
Whatever the case may be, your income has probably experienced some changes over the past few months. Because your cash flow may be different than what it was pre-coronavirus, now’s the best time to rework your business budget and do some much-needed tweaking.
If you experienced a drop in income over the course of the coronavirus pandemic, you’ll need to account for that in your budget. And to help bounce back from the negative cash flow, you may need to make some sacrifices, such as cutting unnecessary expenses and reducing spending.
If your cash flow wasn’t negatively impacted by the ripple effects of COVID-19, you should still consider taking a look at your numbers to ensure your spending won’t exceed your income. Track your finances in your accounting software or books to see where you stand.
2. Utilize Financial Forecasting
Wouldn’t it be great if we could predict the future of our businesses? Sure it would be. But unfortunately, we can’t. What we can do as business owners is forecasting when it comes to our budgets and cash flow.
If you’ve never heard of financial forecasting before, here’s a brief rundown. Financial forecasting can help you estimate your business’s future financial health by looking at 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 statements, balance sheets, and cash flow.
Forecasting can get your business back on track financially and assist you with budgeting. And, it can help you alter your budget plan after coronavirus and better prepare for potential future emergencies.
3. Reevaluate Your Emergency Fund
Does your business have an emergency fund or cash reserve? According to one study, only 60% of individuals have at least R4000 in the bank for emergency expenses.
Although business emergency funds can be tempting to dip into during non-emergencies, they are necessary for your business. The truth is, you never know what kind of emergency might strike your business. None of us entrepreneurs could have predicted this whole coronavirus pandemic. Heck, nobody could have.
If you have an emergency fund, great! There’s no better time to reevaluate your funds to ensure you’re all set if disaster strikes again. On the other hand, if you don’t have a fund in place, it’s time to giddy up and set some of your budget aside for the unexpected.
Take some time to create or rebuild your business emergency fund. If you didn’t have an emergency fund prior to COVID-19, build one as soon as possible so your business is prepared for the worst. The general rule of thumb is having a cash reserve that covers three to six months of expenses … so get saving!
4. Prioritize Paying Back Debts
A number of coronavirus loan options were established to help out struggling small businesses during the coronavirus. While some loans are forgivable, others are only partially forgivable, and some are not forgivable at all. Even if you weren’t able to receive a coronavirus loan, maybe you were forced to borrow funds due to the pandemic.
If you had to take out some type of loan or borrow money during the crisis, you’re not alone. And unless you got a fully forgivable loan (and are using the loan for eligible expenses), you may have racked up some debt.
To avoid being stuck in debt for many years to come, prioritize paying off your debt as soon as possible. Make room in your budget for extra loan and debt payments (trust me, you can make room if you need to). Of course, you should still make necessary business expenses and your emergency fund first priority in your budget. So, don’t push those aside just to pay off your debt sooner.
To help pay your debt off and get your finances back in order, focus on paying off one debt at a time and set an end goal.
5. Look At Your Financial Goals
If you’re like many others, the coronavirus has forced you to rethink your budget and what financial goals you should be working towards.
Take a look at your current financial goals and budget and ask yourself if they line up with each other. If you had to make some drastic changes to your budget due to the coronavirus, you may need to adjust your future financial goals to reflect that.
Your budget should reflect your priorities and financial goals. If it doesn’t, you may need to reconsider your goals and dig deep to think about how you can accomplish them after surviving the coronavirus crisis.