Owner Bain CPA Business Strategies
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How to Help Businesses Prepare for Uncertainty

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Many small business owners are facing uncertainty due to the COVID-19 pandemic and need advice on moving forward. In this article, tax consultant Heather Bain explains how accounting and finance professionals can help small businesses build customer relationships and develop their workforce while mitigating their risk.

Dec 14th 2021
Owner Bain CPA Business Strategies
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Accounting and finance professionals have an opportunity to focus their attention on helping small businesses move forward in the face of the lingering effects of the COVID-19 pandemic. Because accounting and finance professionals are by nature excellent at analysis and innovation, they can focus on cash flow management, supply chain management, customer relationship maintenance, employee benefits and retention, risk management and cost accounting.

Cash Flow Management 

Small businesses need to manage cash flow diligently. Contact the business’s banker about convenient payments that do not incur large transaction fees. Small enterprises may offer discounts for early payment if the business has a cash flow crunch. Some small businesses may be eligible for local or federal grants to assist them in continuing operations next year.

Customer Relationships 

Small businesses should communicate with customers to receive feedback about their products and services and customers’ needs. Small businesses must meet the urgent needs of their customers and maintain ongoing relationships with them to keep marketing and sales costs low. Online forums, social media, email and video conferencing are ways to stay in touch with consumers and receive feedback. 

Small businesses should be collecting customer data by asking themselves these five basic questions: 

Who are my best customers? This information helps to define whether they have any common characteristics such as age, income level, industry and so on. 

What are they buying? Identifying the specific products or services customers are buying will help the business refine its services and product offerings. 

Where are customers buying and using these products and services? Small businesses should determine whether customers are buying products and services through the business's website, through a third-party reseller, at a physical location or through some other channel. 

How are my customers finding my products and services? Small businesses should segment customers according to how they find the business, whether it’s through referrals, marketing, advertising, direct sales and so on.

Why are the customers buying from this business? This question is, perhaps, the most important because it offers insight about the business’s unique selling proposition. If the primary reason customers buy from the business is that the price is lower than its competitors, there is little opportunity to maintain customer loyalty. 

The goal is to identify areas that improve customer satisfaction. Small to medium-sized businesses may have an advantage over larger businesses in their ability to cultivate strong, personalized customer relationships, and this is where differentiation can be achieved.

Accounting and finance professionals can offer insights into the most valuable customer relationships through the analysis and organization of data. Data analytics and visual presentation of the data help management make more informed decisions about the target market and how to meet customer needs in a more efficient way. The more constrained a small business’s resources are, the more important it is to focus on key customer relationships, profitable market segments and pricing strategies. Throughout the pandemic, many successful small businesses have shifted their product offerings to better meet emerging customer needs.

Workforce Development

In addition to customer relationships, employee relationships are imperative to small businesses. Recent challenges have made attracting workers and maintaining a consistent workforce difficult. Smaller organizations can offer accommodative employee benefits, such as additional paid time off, relaxed work hours, service-based bonuses and a personal corporate culture. When a work-at-home arrangement is possible, it can offer the kind of flexibility that is expected by today’s workers. Cross-training employees to perform multiple roles may ensure that work can be completed when employees are furloughed or unavailable to work.

Furthermore, managers may want to develop relationships with contractors and professional service providers that are available to fill in any gaps during labor shortages. Accounting and finance professionals can help management with developing cost-effective hiring programs and competitive salary and benefits packages and negotiating fees for contractors and recruiting resources. 

Risk Management

Managers need to discuss with insurance providers their liability exposure and the potential need for additional employee benefits. To prevent confusion and costly disputes, small businesses must document office policies, procedures and workplace safety measures that are required, especially with respect to COVID-19 protocols.

One of the most crucial areas of risk management is ensuring against the risk of losing a key vendor or service provider. Management accountants and finance professionals can evaluate the cost-effectiveness of insurance policies to protect the small business from the loss of income or other consequences of losing a key supplier.

Supply Chain Issues

Small businesses may want to look at mergers and acquisitions that allow vertical integration to take more control of the supply chain and relationships with the end consumer. When vertical integration is not possible, contracts with vendors and backup vendors may provide business continuity in case of shortages. 

The strategy of just-in-time inventory systems may be obsolete, since supply shortages and logistics do not offer assurance that inventories can be replenished in a timely manner. Small businesses need to rethink their present inventory levels and their threshold for economic order quantities. As projects are planned, accounting and finance professionals can communicate with the prospective vendors and service providers about quantities and timing of delivery. These discussions in advance of an urgent need for goods and services can prevent inventory shortages and project delays. Proactive businesses can instruct vendors to alert the accounting department when stock is low, logistics are delayed or the prices change. Management accountants in particular help decision-making by calculating the effects of price changes and changes in the availability of goods.

Cost Accounting

Based on shifts in target markets, changes in business operations and technological upgrades, accounting and finance professionals can work with managers to determine the costs associated with each change. Prioritization of capital projects, probability of outcomes and analysis of the costs versus benefits are areas where accountants can offer insightful reporting. Based on analyses, reports and expectations, cash flow can be allocated to the business plan. Timely, relevant and accurate reporting is crucial for the success of a small business, especially as resources are further constrained.

Through careful planning, effective communication and immediate action, accounting and finance professionals can help small businesses mitigate the negative effects of financial and economic constraints and emerging risks. Diligent efforts to meet present-day challenges serve the ultimate purpose of meeting customer needs while earning a profit. Gratitude for the customer transcends the fear of uncertainty.

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