As of the writing of this blog post, we are neck deep in COVID-19 land. The novel coronavirus has taken our health and our economy hostage. Literally every day, we are fighting to not only keep ourselves physically safe, but keep our small businesses and non-profits afloat. Never in our modern history have we faced a challenge so great, and one that will have as long-lasting impact as this.
This has been a big question on the minds of our clients. It’s one thing to get the funds and quite another to know how to spend them. This is particularly true for businesses that have been forced to shut down (partially or totally) and/or not able to sell their normal product or service lines. Being strategic about the use of these funds is critical to ensuring that you use this money efficiently and effectively and don’t waste this precious gift.
That said, here are my 5 tips for using the money wisely and surviving this pandemic.
Tip #1: Create New Revenue Streams.
The PPP was meant to pay your employees and keep them producing for you. For those businesses that have been impacted by a shutdown, this may mean that you have to create new ways to make money. Put your entrepreneurial hat on and start brainstorming ways to sell new things (or current things in new ways). Your employees can help you create these new ideas and roll them out to the marketplace…and keep your sales coming in.
Tip #2: Keep Your Financial Forecasts Updated
Imagine being in a big room and suddenly the lights are turned off. That’s essentially what’s happened to our businesses. Before all this happened, you could probably reasonably see what was coming a few months down the road. But now we’re in the dark and can’t see what’s going on right in front of us! It’s a scary and anxiety-producing feeling. The remedy to this is to really rely on our financial projections. They create a pathway of light through this dark and give us the vital information that we need to make crucial decisions. Do we need to cut costs? Are we able to sell our normal services or products? Who owes us money and will they actually be able to pay, and how does that impact my cash flow? There are a lot of moving pieces right now, and its hard to keep track of what’s really happening to our businesses, so frequently updating our financial forecasts will help us to wrap our minds around the reality of our business and keep us moving forward.
Tip #3: Plan For Repayments
The PPP is a forgivable loan so you don’t have to pay it back. But chances are you got more money than just the PPP, and chances are that you will have to pay those monies back. So make a plan for how that will look. When will payments start and how long will they last. Going back to my last tip, you want to update your financial forecasts accordingly so you don’t get caught off-guard. And if you don’t feel like you can handle the repayments, you may want to think about prepaying those monies back now.
Tip #4: Look For The Opportunities
Albert Einstein once wisely said, “In the middle of every difficulty lies opportunity.” Remember these words and live them, because there is tremendous opportunity right now. A lot of people are hurting, and the greatest role that an entrepreneur can play is to bring a product or service that can heal those wounds. Can you use some of the PPP money you got to pivot your business to help out others? For example, can you teach people your skills so they can get jobs, or can you give away some of your products to those in need? Step up to the plate and be the business leader that your community desperately needs.
Tip #5: Keep Your Mind Strong
Everything ultimately boils down to your mindset. It’s so easy to feel anxious right now and start making decisions from an emotional standpoint instead of a factual one….and an emotion of fear at that! What’s worse, your brain then subconsciously blocks any opportunity that presents itself because you’re so focused on what’s going wrong. This is a recipe for disaster, and unfortunately (or fortunately) something only you can resolve. So take some extra time to keep yourself centered during this time. Hopefully you’re feeling some anxiety relief from the PPP money that you received, so take this as a moment to pause, catch your breath, re-center and re-focus. This will allow your intuition to kick back in and guide you safely through this situation.
Remember: This will probably NOT be the last time that your business goes through something like this. The economy naturally goes through upswings and downswings. If you want to build a business that lasts into the far future, you must learn how to build resiliency into your business against these swings. And no time like the present! So take this as a real-life learning opportunity to fortify your business…using Uncle Sam’s money.