MSME Priorities during COVID 19 Crisis:
Cost Cutting and Cash Flow Boosting Measures
The rules of the game have changed for all of the Filipino enterprises, whatever is your size. A big question hounding the MSMEs today is how long can they survive should the severity of the COVID 19 cases intensify and the decline in demand continue. The enterprise cash positions and liquidity profile are highly vulnerable during this crisis. Here are some tips that could help you reduce unnecessary expenses and increase your cash flow:
Plan out carefully how to maximize all the incentives provided and are still available for the small businesses such as loan programs (SBCorp.), tax incentives, lessor moratorium. (Read more:....)
Venture into something extraordinary. Sell your products and services online. (Read more:....) Offer advanced gift certificates and vouchers to your loyal and potential customers. Solidify that loyalty through the gift certificates and vouchers that they can claim after everything has got back to the new normal. They will definitely look for you and stay with you. This is now how you can build and maintain trust in the brand and quality of your products and services.
Start reaching out to your customers, both loyal and potential. Keep them on the loop. Let them know of the changes in your operations and the alternative arrangement that you could offer them. But of course, connect with them strategically and efficiently. Make a plan for that and dedicate a staff to do that. Now is the time to bring out your “directories” or any tools that you used before to collect customers’ information. Hosting customer day through webinars can be one of your options. (Read more:.....)
Job security and survival are the two major concerns of both the owner and the employees. Start the cost reduction measures in redirecting your other expenses such as those funds for advertising and promotions to your employees’ salary. Consider as well to give up your salary as the owner.
Areas about employees’ compensation that will be affected by the cost-reduction measures may include the allowances, overtime payments, bonuses, and salary increments. Better handle these elements with much care especially for those low-wage earners of the company and those who are working and serving as your company’s Frontliners. Ensure that you remain open and transparent to your people. Trust and confidence are very significant during these difficult times.
When you implement these cost-cutting strategies, don’t compromise the health and safety of your entire team. Make sure that protocols and in place and they are strictly followed. (Read more:....) Those cost sacrifices will be useless if you start losing your people by getting infected with the virus.
Manage your suppliers. Re-assess them as well. The market now is wide open for you to scout for alternatives, which available suppliers could offer you the lower and most reasonable prices. As the owner, work on this challenge head on, but plan out as well how to deal with the long-term supply chain situations, might as well consider not just the price but also the sustainability aspect of it.
You may also explore renegotiating your credit terms with your existing suppliers if you still want to keep them.
To improve your financial stability during this crisis, keep in mind and in your heart what the famous quote promises: A penny saved is a penny earned, every single piece of it.