Financial Strategies for Keeping Your Business Afloat Amid COVID-19Here are steps you can take right now.

For the past year or so, normal life in the U.S. has been impacted as states and cities work to slow the spread of COVID-19. These steps, which have included collective stay-at-home and physical distancing orders, are necessary to save lives. But they came with an economic cost.

The scale of the fallout is unprecedented, and small businesses have particularly been hard hit. From restaurants to construction companies, the vast majority "require human interaction of some sort," says Rob Einstein, a regional sales manager atU.S. Bank. "They are all being impacted by this."

Despite the continued uncertainty, there are steps business owners can take to alleviate at least some of the hardship and worry. Below, Einstein breaks down how businesses can strategically prepare for the future.

Understand your expense structure.

If you haven't already, Einstein recommends conducting a detailed analysis of your finances. Knowing exactly how each dollar is earned and where it's spent is always a good idea, but "it's more important in hard times," he says. "Right now, it's more important than ever."

This includes doing a deep dive into all your revenue sources. Once you understand how money is coming in, you can plan for various scenarios in which individual channels are reduced or dry up altogether. Just as important is having a comprehensive understanding of your expense structure, including costs that are fixed versus those that are variable.

Run a stress test.

Once you have a solid grasp on your financials, Einstein recommends going on the offense by conducting a stress test. If you typically do a certain amount in sales, measure how your business will be impacted if that figure drops by 10 percent, 20 percent, and even 50 percent. How does the reduction impact your cash flow? And are there steps you can take to continue to operate even if revenue declines significantly?

Make contingency plans.

Given how quickly the economic climate is changing, Einstein advises that business owners plan for a number of different scenarios—an exercise that should include a clear-eyed understanding of how long your company could survive in each situation. Having a number of contingency plans outlined in advance allows "you to act versus react," making quick decisions that could ultimately save your business. For example, is there a way you can adapt to serve clients virtually if stay-at-home orders persist? Many businesses that rely on in-person interactions have found that some of their services can be conducted remotely, if imperfectly.

Talk to your banker.

He or she will be able to help you navigate the continuously evolving relief landscape and advise you on a financial path that works best for your business. If you have a pre-existing relationship with someone at your bank, be it a relations manager or a business banking specialist, lean on them as a resource.

If you don't, Einstein recommends reaching out to a branch manager at the bank where you do either your personal or small business banking. "They should be able help guide you in the right direction," he says.

U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

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