How to plan a budget in a crisis

With the end of the financial year around the corner, you’re probably busy planning for the next one given the prevailing economic malaise. However, there will be significant differences in the way you approach it for 2020/21. As a small business, you may have realised the cushion between survival and collapse is very thin. In this post, we’d like to present some tips to help you plan a budget in a crisis.

1. Strengthen your revenue sources

Even in a crisis, you’ll need to spend, but exercising financial prudence is essential. By identifying the winners in your product or service portfolio as well as your customer base, you’ll have a sense of what and who you should be investing in. Strengthening these revenue sources will ensure the pipeline continues to bring in much-needed cash to keep the business going.

2. Monitor expenses

In the same vein, it is critical to scrutinise the business’ expenses. Knowing where and when money is flowing out allows you to plan for it. This includes negotiating better terms of payment or payment plans that don’t break the bank. In addition, greater scrutiny will force you to plan your investments.

3. Explore financial help or assistance

You may have built the business without needing any financial assistance. But in good or bad times, seeking out possible financial help or assistance can give the business the hand-up it needs, whether to take advantage of an emerging opportunity or plug a hole in the cash flow. Do not allow your ego to get in the way. Be pragmatic and responsible at the same time.

4. Manage your debtors and creditors

Sometimes, people do see them as two sides of the same coin – both need to be at a healthy level to keep the business going. In a crisis, balancing them can be tricky. Hence, it’s best to confront the challenges pertaining to them at the budget planning stage.

Whether you have 3 or 6 months of cash reserves, your budget must ensure the business carries on even if things come to a standstill. The guides above should help. Connect here to learn more.

Image by stevepb via Pixabay

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