Despite many of the negative headlines we see each day about small businesses being forced to close because of the pandemic, there are also many that are holding their own during the crisis. This goes to show that challenges can be overcome if the right measures are taken, and budgeting for uncertain times is certainly such a measure. These tips may help you create a budget that will help prepare you for whatever the future has in store.

1. Beef up your emergency fund

If there is one thing the coronavirus pandemic has taught the nation, it's that you can never be too prepared for hard times, and those can come very quickly and without warning. You should be focused on putting aside as much money as possible for the future, even if you are fortunate enough to have solid revenue right now.

If you don't already have an emergency fund, set one up as soon as possible with a business savings account. If you already have an emergency fund, add to it as often as possible. Treat it as a regular expense like you would a monthly bill, to ensure it continues to grow over time. That way, if times do become hard for your business, you can be prepared and have a fighting chance of overcoming the obstacles.

2.  Determine spending (and saving) priorities

As you look for ways to add to your savings account, determine what expenses and purchases are the real priorities and which can be either reduced or eliminated. With the state of the economy as it is and the fact that nobody knows how long it will be impacted by the pandemic, now is not the time to spend money on frivolous purchases. All non-essential budget items should be reexamined. It's in the best interest of your business to spend money in areas that directly help you with revenue, profit, and/or cash flow.

3. Envision possible revenue situations and plan accordingly

In order to be as prepared as possible, in addition to saving, you should plan for a variety of potential revenue scenarios so that you are well braced to face even the harshest. Forecast what revenue is likely to be a month from now, six months from now, etc., and understand exactly what needs to happen on your end and with your market to meet those goals. Now, do the same for when things don't go as planned. The more scenarios and solutions you can come up with, the better shape you're likely to be in, regardless of which scenario actually plays out.

"Once you have your forecasted scenarios, take a look at the cash forecast for the business based on each scenario," says Jared Hecht at Inc. "Knowing how much cash you'll have on hand should each scenario (or something close to it) play out will help you plan for necessary changes. For instance, if you reach your "downside" scenario, will you have to make layoffs or close a location? Will you have to apply for a loan? Knowing the thresholds for which you'll have to take action will help you act quickly should that scenario come to bear. Speed is imperative if you need to downsize expenses, especially in a rocky economic climate."1

4. Analyze consumer behavior

One way to better prepare for a variety of scenarios is to analyze consumer behavior as it pertains to your business. Study how consumers behaved during pre-pandemic times and how they have changed since then. Learn what you can about how they behaved with your competitors and in your industry. Read what economists and industry experts have to say and gather as much authoritative information as possible to help you make informed decisions so you can optimize cash flow and revenue.

5. Evaluate your financial assistance options

By now, you've likely explored government financial assistance options, such as the Paycheck Protection Program and SBA disaster assistance loans if you needed them. But if you currently find yourself in need of financial assistance or if you do in the future, you can always reach out to your bank to discuss the options available to you.

It can be difficult to plan for unforeseen circumstances, but the pandemic has shown us what a lack of preparation can look like. It is important that small businesses learn from the mistakes of the past and prepare for the worst.



The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank. Nevada State Bank is a division of Zions Bancorporation, N.A. Member FDIC