The COVID-19 outbreak has had a dramatic impact on everyone’s life. While many people are spending this time staying inside as much as possible, the continued isolation has slowed the economy while also having a negative impact on many people’s financial positions. It has also had a big impact on companies all over the world. Fortunately, there are several things that businesses are able to do to try and reduce the financial strain that they are experiencing.
Cut Operating Costs
One of the ways that businesses are able to offset the financial strain is by reducing operating costs. While it will be hard to offset the lost revenue completely, there are a lot of things that a business survives or possibly thrives during COVID-19. Some strategies that businesses follow include furloughing staff, reducing compensation for a period of time, negotiating terms with vendors, and reducing purchasing until the business cycle ends. All of these efforts can reduce costs and improve cash flow.
Section 301 Refunds
Many businesses today that import and export products or materials are required to pay tariffs to either the US government or another country. During this period of time, many businesses are able to take advantage of having a portion of the refund reimbursed or reduced. When getting a section 301 tariff refund for your business, you could reduce your operating costs, which is particularly helpful right now. You will have to speak with the right parties to determine how much tariff relief you qualify for.
Another way that a business can reduce financial strain is by getting relief from their lender. Many lenders across the country have received guidance that they can offer relief to businesses that are directly affected by the COVID-19 outbreak. Some of the forms of relief can include delaying principal and interest payments for a few months, improving working capital availability, and doing a variety of different tasks that can help a business get through the tough times. No matter what relief is provided, it is important that a business owner has the relief fully documented.
The federal government has revealed a $2 trillion plan that aims that provide relief to all people and businesses. This includes providing businesses with a total of $350 billion in forgivable loans. A business can receive a loan up to 2.5 months’ worth of their payroll. As long as the majority of this loan is used to pay employees and cover benefits, the loan will be completely forgiven. This will prove to be very helpful and will reduce the number of layoffs that are needed.
Another way that you can reduce financial strain is by pivoting operations. While your old business model may not be in need for the time being, there are other services that could be in even more demand. It is important to listen to your customers and analyze the market to determine what services could be helpful. This will ensure that you continue to offer great services to your customers and maintain some revenue.
Overall, COVID-19 is continuing to have a major impact on the world. This will continue well into the future as the outbreak continues to put a lot of strain on individuals and companies. For those that are looking for a way to offset the financial strain, following these tips and strategies employed by other companies could help a company to stay in a good financial position.
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