The Top 3 Steps To Cash Flow Survival For Small Businesses

The Top 3 Steps To Cash Flow Survival For Small Businesses

Cash flow is the in- and out-flow of money from a business. Positive cash flow is a good sign for small businesses: it allows business owners to pay expenses such as rent, salary, utility and phone bills, purchase inventories, make loan payments, and reinvest in the business. By refocusing on generating cash rather than making a profit during this time of survival, small businesses can improve their liquidity position and not be forced into difficult decisions.

Let’s talk about the most crucial steps to cash flow survival for small businesses during this pandemic:

1. Review your financials: cut back on expenses
2. Explore financial support
3. Prioritize generating cash over making a profit

Review your financials: cut back on expenses

Small business owners are facing declining sales and rising cost. What can you do to trim your budget?

Variable expenses are usually the easiest to find the room to reduce.  Cut discretionary spending such as free coffee or subscriptions that aren’t critical to your operations, decrease unnecessary inventory if it’s not in use, reduce employee hours if necessary, find a less expensive alternative to ship your products.

Fixed expenses, though they take more research to change, can often make a big impact in your budget. Office and retail space leasing is often one of the biggest fixed expenses: when your lease agreement is up for renewal, consider shifting to a virtual office space or offering online for now. Consumers who are dedicated to your product will follow you online, where you can weather the pandemic storm while building a farther-reaching audience than your local streets.

Explore financial support

There are many government programs available to small businesses – some created as COVID responses and some that already existed. Tip: make sure you read through the requirements to be sure you’re eligible before you do the work to apply!

Note that these programs may be change or close as the government does, so check back in for updates and helpful resources on their small business webpage.

CEBA (Canada Emergency Business Account)
Interest-free loans for small businesses and not-for-profits

Recovery benefits for Canadians
Benefits to help Canadians and businesses facing hardship as a result of the global COVID-19 outbreak

CEWS (Canada Emergency Wage Subsidy)
Help for businesses to keep or re-hire employees

CERS (Canada Emergency Rent Subsidy)
Rent and mortgage support for qualifying organization affected by COVID-19

BCAP (Business Credit Availability Program)
Credit to help cover operating costs due to the COVID-19 pandemic

RRRF (Regional Relief and Recovery Funds)
Help for those unable to access other support measures. Apply through your Regional Development Agency (RDA).

Black Entrepreneurship Loan Fund
Loans that will provide loans of between $25,000 and $250,000. More details to come around eligibility requirements and how to apply.

Support for Indigenous businesses
Short-term, interest-free loans and non-repayable contributions

Prioritize generating cash over making a profit

• Ask new customers for a deposit or partial payment up-front
• Offer exclusive discounts to your existing customers
• Start sending your invoices early following the delivery of products or services
• Focus on your past due accounts and ask for partial payment if full payment is not possible
• Make it convenient for clients to pay by offering additional methods of payment
• Sell off inventories and idle equipment, or lease your equipment

Be sure to check out our live online program Consultant in Residence: Financing this Wednesday, October 21 during RPL’s Small Business Week.

Find the full roster of talks given by industry experts at our Small Business Week speaker series, and many more business resources on our website.

Tim - Business Services