The small business community had no pandemic playbook to turn to when COVID-19 shut down the economy practically overnight. So it’s been writing its own.
Now as businesses navigate the reopening chapter, maximizing cash flow, unearthing new revenue streams and forging meaningful relationships with financial institutions have emerged as key elements of a sound recovery story, experts said during the third episode of CO— Blueprint, a new video series dedicated to providing small businesses with the strategies they need to reopen their businesses successfully.
Here are four key takeaways from their conversation with Jeanette Mulvey, content director for CO—.
Maximize your cash flow like your (business) life depends on it
Even during flush times, managing and maximizing cash flow is key for any business. Mastering that discipline is now critical amid a pandemic-fueled financial crisis — yet businesses across industries struggle to get it right, said Christopher Hollins, managing director, general manager of cash management, for Chase Business Banking, whose clients range from $1 to $25 million businesses, he said.
“Most business owners only have cash flow for about 27 days,” he said. “In Black, Brown and female communities, that window is less than two and half weeks.”
Business owners can start to optimize their cash flow by evaluating two factors, he said. “How is money moving within your particular business? And how are you thinking about relationships with suppliers to optimize payment terms to avoid cash shortfalls?”
With that clarity, businesses can then set payment terms to ensure they’re not waiting too long for fees on services rendered.
A poorly run business will find accessing capital more difficult or costly, he said. By contrast, if you have a very well-run business, you’re going to have more options than someone who doesn’t, Hollins said.
Build your ‘bankability quotient’ to gain access to capital
Hollins advises businesses to up their “bankability quotient” by forging relationships with the banking community — from touting their brand equity via networking to soaking up financial consultants’ expertise — to build good will that will pay off in the long term.
Business owners should ask themselves, for example, “Do you have individuals in the financial services industry that you’re connecting with? CDFIs [community development financial institutions] that you can engage with and know your story?” These connections become foundational to accessing capital when it’s needed, Hollins said.
Think of these experts as your own informal board of directors who can give you ideas and honest perspectives, he said. They can serve as consultants and advisors who will know you along your journey.
Diversify your revenue streams to jump-start business with three simple questions
Stalled businesses would be wise to consider new avenues of growth to jump-start sales, said Manny Cosme, CPA, president and CEO of accounting firm CFO Services Group. For businesses, diversifying revenue streams means considering three factors: What products and services a business provides; who do you sell to, and how you deliver it, he said. The answers will reveal untapped business opportunities, from serving a new customer base to uncorking a fresh sales stream, Cosme said.
It did for Michele Gaton, co-owner of Extra Virgin Restaurant, a New York City-based restaurant. With her in-dining business shuttered, Gaton shifted multiple gears. She moved to an all-day menu that incorporates everyone’s favorite things and everyone’s taste buds, she said. The restaurant also made a bold pivot to takeout, setting up an outside patio area for pickup and delivery orders, while expanding its customer reach via six food-delivery platforms. The pivots have helped Extra Virgin stay afloat, Gaton said. “Now we have expanded our customer base, going to places we never had before.”
Build a targeted marketing strategy
In March, Barbara Meikle was forced to shut down Barbara Meikle Fine Art, her Santa Fe, New Mexico-based art gallery. The question quickly became, “How do we continue to generate revenue and serve customers?” she said.
A targeted social-media marketing strategy was one solution. Meikle tapped direct mail and national advertising to promote the gallery to baby boomers; it “amped up” marketing on Facebook to reach millennials; and targeted Generation Z via Instagram, she said. “Because of our online presence, sales are already coming back,” Meikle said. “I’m optimistic.”
Hollins is too. "The small business community is made up of optimistic people with creativity who won’t let a pandemic impact their dreams," he said.
