The uncertainties of the COVID-19 pandemic have made many entrepreneurs doubtful. Two years in, small business owners are still facing incredible challenges, including inflation, hiring shortages, and supply chain delays.
To help support entrepreneurs through these difficulties and help them see the other side, CO— recently dedicated a special edition of our Start. Run. Grow. event series on how to weather financial uncertainty.
Start: Be transparent with your stakeholders and invest what you can into your business
As someone who started a business during the recession of 2007, Alexis McSween, the founder and CEO of Bottom Line Construction & Development, knows about financial hardships. Today, McSween said her company is contending with the same supply chain issues many other businesses are, which impacts the arrival time of products and services.
As companies like McSween’s face rising costs of doing business due to these supply chain issues and inflation, her best advice is to be as transparent as possible. This is especially important when it comes to giving proposals for projects where the price may increase in a matter of weeks.
“When we provide a proposal, we only insert the dates that have been guaranteed to us,” she said. “Right now, those dates sometimes don't go past 30 days. Most of these larger clients are aware of what's happening, so when we give the bid … we really try to maintain that communication. We're setting it in our calendar to reach out to that vendor a week prior to just see where we are.”
Many of these challenges are out of McSween’s hands; she “just has to adjust to them,” she said. To help with that adjustment, she recommended including any savings you may have to get started as an investment in your business.
“I would also consider a small loan if you have a plan in place,” she said. “Reach out to your local Small Business Services (SBS) office.”
[Read more: How to Apply for a Small Business Loan for Your Startup]
Run: Track your business’s growth through metrics
Businesses can better prepare for difficult times if they constantly know the financial situation that they're in. Small businesses should be constantly keeping track of their financial metrics. Tom Kelly, director of product marketing for Oracle NetSuite, said the best specific metrics to follow depend on the size of your business. However, every business should understand their cash flow on both a cash basis and an accrual basis.
“A cash basis … means when I make a sale, I collect the cash,” said Kelly. “There’s another concept called an accrual basis, which means you make a sale, you have a receivable that you set up. So you recognize the accrual business, whereas [with] cash, you already recognize that revenue when you get the cash in your hand.”
There's a whole plethora of things you can be looking at, but I think it's most important to understand the situation you're in and drill down on those things that are going to make the most sense for your business. What are the drivers that are going to move it forward?
Tom Kelly, director of product marketing, Oracle NetSuite
Kelly also advised entrepreneurs to track inflation metrics. He suggested that businesses take a step back and determine how they want to “mechanize inflation in their financial plans.”
“There's a whole plethora of things you can be looking at, but I think it's most important to understand the situation you're in and drill down on those things that are going to make the most sense for your business,” said Kelly. “What are the drivers that are going to move it forward?”
[Read more: Roadmap for Rebuilding: Mapping Your Financial Future]
Grow: Simplify your approach to mistakes and hardships
From Foursquare to Shake Shack to his current company, Walker and Company, Tristan Walker has helped many successful businesses grow. And in all of his experience, Walker has never seen anything as difficult as the hardships that were brought on by the COVID-19 pandemic.
During that time, he said, the businesses that had the most success were the ones that simplified their companies.
“Throughout the… pandemic, we've had [to] simplify our infrastructure – the number of SKUs we've had, the number of color variations that we have, the number of manufacturers that we work with, etc.,” said Walker. “That simplification allows you to conserve cash.”
“As an entrepreneur or even a leader in a growth company, you're going to make mistakes,” he added. “Sometimes mistakes will happen to you as opposed to you being the cause of it, and simplification is always the easiest way to get around it.”
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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