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Business Budgeting in a Pandemic-Shaken World

Reviewing your finances can help prepare your business for future disruptions.

If you are like most small businesses, 2020 has been a year of wild fluctuation in budgets and planning. While daily operations may have been one way at the start of the new year, by March and April the entire landscape had changed with the advent of COVID-19 and the ensuing shifts in state and local regulations.



Changing revenue streams, temporary shutdowns and being forced to pivot quickly are all part of the everyday world of doing business these days. And while being adept, resilient and shifting with changing market conditions are normal for every small business, COVID-19 has brought new meaning to being nimble, especially with budgets.

If you have made it thus far, pat yourself on the back, but know that the coming months or even years could matter even more to the strength of your business. Budgeting to reflect the new realities of daily operations may mean all the difference.


Financial forecasting

When it comes to budgeting in a chaotic environment where you’re not sure what revenue streams will be, looking at cash flow is job number one. If you have never utilized financial forecasting tools, now is the time to do so. Your advisor has specialized software that can do this and stress test your revenue stream, but even a simple Excel spreadsheet can help you look at the future in multiple ways. Financial forecasting tools can also allow you to run hypothetical scenarios and make contingency plans for each one, so you can adjust quickly in any new landscape. While you may not be able to predict the future, having an adjustable plan in place can provide peace of mind.


Real estate

Another budget item to consider is your real estate footprint. Are you leasing or do you own your commercial space? Does it make sense to sublease your space or possibly downsize your space?

Now is a good time to look ahead and consider the space you absolutely need for your staff and everyday operations, and think about other options if you have extra space. Some ideas could include inviting a partner, client or even a vendor you closely work with to share space – and the cost – or opening up part of your space for coworking, where solo entrepreneurs safely share office space and common functions. Reach out to your network and you may also find other small businesses who are figuring out creative ways to reduce monthly real estate costs.


Emergency funds

Finally, shoring up emergency funds is a must-do for all small businesses during the pandemic. Ensuring three to six months of continued operations in the face of another shutdown is a good goal. Check out your insurance options with your advisor and make sure any disruption insurance is up to par. Get a clear picture of exactly what your current insurance will cover and what you’ll need to file claims. Do you need to allocate funds to bolster your current insurance coverage? Consider all the options.

Keeping focused on your long-term goals and preparing as best you can to weather unexpected scenarios could add longevity and sustainability to your business vision.


Next steps

Three ways you can take action to plan ahead for business disruptions:

  • Check your insurance coverage.

  • Talk to your advisor about long-term planning for your business.

  • Consider creative real estate options to reduce your monthly costs.

Sources: dailyherald.com; bizjournals.com; forbes.com; bench.co

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