With the end of the pandemic in sight, businesses are finally starting to bounce back in full force. As your business starts to plan for a reopening after COVID , the importance of having a back-up plan in place should be on your mind. The Wall Street Journal reported that around 200,000 businesses in the U.S. closed permanently because of COVID.
A major issue in the small business community was lack of preparedness for such events. Building a back-up plan for your business in place will offer some protection should another emergency arise.
A Back-Up Plan for Your Business
A business continuity plan is all about imagining how to survive worst-case scenarios. It is a specific kind of back-up plan that will allow your business to maintain or restore functionality quickly in an emergency.
A few years ago, the idea of a pandemic was almost outrageous. Today, it is clear that these kinds of worst-case scenarios can happen unexpectedly, and the companies that survive must plan ahead and be prepared.
Staying in business requires companies to be proactive. Immediately after an adverse event, like the recent pandemic, for example, is the best time to review or create a continuity plan with your CPA.
Tips For Building a Back-Up Plan
Start by defining some problem scenarios. For example, what happens if there is another pandemic? What about a more localized situation like a natural disaster or a fire?
Write out the challenges your business might face, such as:
- What would I do if the physical location can’t open?
- Is it possible to work remotely long-term?
- How can I get necessary supplies?
- Could I afford to maintain employees?
Dissect your business to identify critical functions affected by a crisis scenario, such as banking and IT. Determine what part of your business relies on vendors and other services to operate. Consider how long each of the functions of the business can survive without outsourcing any services.
Small business owners or sole proprietors should turn to experts like a CPA for guidance in business accounting. In emergency situations, your finances will be high on your priority list, right behind the health and safety of your team. Licensed professionals, like the team at Insogna CPA who are well-qualified to provide accounting in Austin, will help you understand what steps you’ll need to take to stay afloat.
Build Up Cash Reserves
The key to your business’s survival might be in cash. Sit down with a CPA and figure out ways to squirrel away cash to a business savings account. It might be necessary to rework your current budget to increase your long-term wealth building, but the payoff during tough times will be priceless.
Reduce Fixed Debts
If your business took out a loan to get through the pandemic, go back over the payment arrangements and strategize. Companies who took out a Paycheck Protection Loan may not have to pay it back at all. While EIDL’s are not forgivable, the terms are fluid. Double-check to see when your loan is due and how you can use it most optimally for your company. Reducing your business’s debt now will work to your advantage when you next find yourself in a tight spot.
Financial planning is more critical than ever! Contact Insogna CPA to enlist help strategizing a long-term business accounting plan to help support your organization survive the next disaster.