Small Business Budgeting and Financing: Reopening Post COVID-19 Shutdown

When planning to reopen after the COVID-19 business shutdown, there are some key small business budgeting and financing strategies you can use to help your business thrive and succeed during the nation’s economic recovery. For this article, we interviewed Jennifer Palmer, owner of Nourishing Journey, an organic café and wellness center in Columbia, MD. Here is what you need to know.

Financing and Revenue

When reopening your business following the COVID-19 shut down, revenue projections may seem uncertain. This can make estimating cash flow and meeting expenses difficult to foresee and maneuver. Before developing an operating plan, Palmer recommends making your best guess at revised revenue expectations during this time when businesses are open, but still restricted.

 

Palmer says, “I made a rough revenue estimate as to what I thought we might bring in for the café and then also separately for the wellness center. I estimated about 50% of revenue compared to what we had brought in before we had to shut down and was pretty accurate with that. I figured it was a good place to start. If I brought in more money than that, then I would be ahead of the game. If I brought in more money than 50% of our pre-COVID shutdown revenues, then I could also extend hours and grow into more of a presence like we used to have.”

 

When asked how she determined her revenue estimates, Palmer says, “Part of what went into my decision was determining how many people would partake of our services and food. Some people don’t want to leave home or come in to contact with others yet. Other people can’t wait to get out of the house. Once deciding what I need to do to provide for a safe reopening, I had a little more insight as to a good guess for revenue.”

 

Once you have an idea for what to expect in terms of revised revenue projections, it’s time to secure additional financing in the form of loans and grants. Palmer says, “The first place to start is with your bank. I’ve also applied for grants from my state and federal, as well as some private grants for businesses. I first approached my bank, then applied for an SBA loan and grant and other grants as well. Most did not come through because there were so many people who applied. I was glad that I applied for as many as I did so that I got something to support the business. Talking to the manager at my bank was very helpful. And I was able to navigate it more easily than if I would’ve done it alone. The bank made applying for the SBA PPP loan and extending my credit quick and easy with little information needed for the application process. Whenever I had a question, they had answers within an hour.”

How to Cut Operating Expenses

When creating a new operating plan, there are changes you can make to open in a budget-friendly way, such as limiting staffing. For a brick-and-mortar store or restaurant with foot traffic, you will need to decide what hours you want to open, possibly on a downwardly-revised schedule. You might also choose to cut back on inventory or eliminate offering certain food items that might not sell well so you don’t have waste or spoilage.

 

Palmer says of her experience, “My plan was to go as lean as possible and then work our way up with staff as needed. We shortened our opening hours and limited our staff hours. Instead of having administrative hours during our normal operating hours, they were shortened to four hours a day. Also, in our café, we only have one person working a shift at a time instead of two. Service may be a little bit slower in the café, but everybody is really understanding and just happy to get their smoothie. There were a couple items in the café that we decided not to sell as well. So we took those less-desired items off of the menu for now. This way we wouldn’t be wasting money if we didn’t sell.

 

When asked how she made these decisions, Palmer says, “I considered the expense of the hours open and opened with limited hours. I scaled down the administrative and café service hours to as little as possible considering the circumstances. We didn’t need administrative staff all day long, being that we weren’t as busy. This allowed us to open with a budget-friendly approach. Also, with all of this, I had to consider what I could pay them for the hours needed in contrast to what they were currently bringing in with unemployment. I did not want my staff to be bringing in less money than they were before the shutdown. Luckily, it worked out well and I was able to bring back most people with altered schedules.”

 

In terms of areas in her budget that she chose not to skimp, Palmer says it was important to fill the shelves of the gift shop located within Nourishing Journey’s café. She says, “When we opened, I knew I needed to stock the shelves in the store. The last thing people want to see when they come into the store is empty shelves, especially during these times. So I did spend a little extra money bringing in items that I thought would sell.”

 

As for advice to other business owners trying to figure out how to budget upon reopening, Palmer advises, “Remember why you were in business. Make sure you are offering what made your business successful to the fullest of your ability.”

Final Thoughts and Considerations

When asked what final thoughts and considerations Palmer wants to offer business owners about budgeting and finances in the time of COVID-19 restrictions, she says, “Just make sure to take advantage of all grants and approach your business reopening as if you were going to be successful, regardless of COVID-19 issues. Reach out to your customer base and offer support, while also encouraging them to support you and other local businesses.”

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