Financial and business survival during a crisis

When a crisis strikes, income shrinks quickly. So how do you start planning your way out of the disaster?

Small business owner checking off a list of financial crisis survival tips

Protecting income

Revenues get hit hard during a national or global crisis. But there are things you can do to help soften the blow.

Getting invoices paid

  • Cash flow will slow down for your customers, too. Be patient with them. Consider accepting staggered payments, and prepare to wait longer before getting your money. Your kindness will come back to you.
  • You could allow payment by credit card. This will give your cash-strapped customers the flexibility to pay on credit. Plus it’s faster and easier for them to do, which helps when there are so many things competing for their attention. Learn how to accept online payments.
  • Did you know some companies will give you money for your unpaid sales invoices? It’s a little like getting an advance on what’s owed to you. Learn about invoice financing.

Making new sales

  • Promotions can encourage customer spending. Consider offering extra value such as 2-for-1 deals, or buy-this-and-get-that-free – but avoid discounting if you can.
  • Consider selling online, if your store is out of commission. You can start with online marketplaces like eBay, Amazon or Facebook. As time goes by, you could even build your own online store. Learn the fastest ways to start selling online.
  • Pre-sell stuff by taking orders, or selling vouchers to your loyal customers. You can encourage uptake by offering deals on forward purchases. Just be sure you’ll be able to honour those purchases.
  • If you have extra stock, look for wholesale buyers. You might be able to sell some to another store, or maybe your supplier has other buyers in mind.

Getting on top of expenses

Costs become a massive focus when cash dries up. It's time to look at what you owe, and what you spend.

Catching up on bills

  • There’s no shame in having cash flow issues. Ask suppliers for more time to pay, or to pay by instalments. Just make sure you have those conversations before the bill is due.
  • Some vendors may already give you flexibility in how you pay. For example, insurance payments can often be spread out over the year. Take advantage of those opportunities to delay outgoings.
  • Discuss rent with your landlord. If you can't get physical access to your business, then it makes sense to at least review your agreement. Many landlords provided relief during COVID-19.

Ideas to control spending

  • Sort your expenses into must-haves, good-to-haves, and luxuries. That way you’ll know where to trim costs if the need arises.
  • Your customers’ needs may change in times of a disaster. Check sales records and avoid stocking up on items that have stopped moving.
  • Plan your spending. You can probably push back certain non-essential purchases. Be prepared to move a little slower and more cautiously.
  • If you can’t afford to pay your employees, explore part-time options. There may be something creative you can do to keep the team intact.

What to do about borrowing

Loans may be just the thing to help you through a disaster. But they can be a massive extra burden, too.

Dealing with existing loans

  • Consider refinancing short-term loans (especially overdrafts) into long-term loans. The interest will be lower and your monthly repayments will likely drop.
  • Ask your lender about a repayment holiday, or paying interest-only for a while. Prepare well for the conversation. Try to estimate your costs and income for the next 12 months. And focus on what you’re doing to control costs.

Considering new loans

  • Figure out how much money you’ll need to come out the other side of the disaster. The effects could be felt for a long while, so try to think beyond the cash crunch that’s right in front of you.
  • Don’t automatically go to credit cards, lines of credit, or emergency loans because short term finance comes with hefty interest rates that will hurt over the long haul.
  • How much debt do you already have? There’s a point at which it’s unsustainable to borrow more. You should know what that limit is before extending your lending.
  • What will you do if the lender asks for more security? Are there other assets – business or personal – that you’d be prepared to lose if the business doesn’t recover?

What about alternative lending?

  • If you have previously borrowed from friends and family, then now would be a good time to talk to them. Tell them if you’ll need extra leniency on the debt.
  • Peer-to-peer lending took off after the 2008 global financial crisis so community-based lending may play a big role in this recovery too.
  • GoFundMe and various other social platforms could help you generate some cash but you’ll need to offer something cool in return – such as merchandise or creative new products.

Numbers to watch

In a financial emergency, you need to keep things simple. There are lots of numbers you could watch but the most important is your cash runway. If you want to go a step further, then take a shot at a cash flow forecast, too.

What is your cash runway?

Add up all the cash you have. Now plot all your upcoming expenses on a calendar. Assuming none of your customers pay you another penny, when will you run out of cash?

Use this timeline to set priorities and identify which expenses you need to manage.

What is your cash flow forecast?

You could take the cash runway a step further by noting when money will come in. Just make sure you're conservative about when payments will actually land. Use this timeline to see when you can afford to pay bills or place orders.

Try our cash flow forecast template to make this easier.

Do you need to downsize?

Downsizing can lower costs and, in some cases, reduce risks. In a national or global crisis, however, downsizing may look a little different than normal. Explore your options.

  • Instead of closing shops or offices – you may be able to negotiate much lower rent while riding out the downturn. Talk to your landlord.
  • Offering fewer products or services – while some things will lose relevance, new needs may emerge. Speak to your customers and see what else you could provide them. Be creative.
  • Laying off employees – Perhaps you can find ways to keep your people busy, even if it’s part time for now. Speak to your people. They may have interesting ideas about how to restructure work.

Coming back stronger

As business slows down, you may have some extra time on your hands. Use it to plan for the recovery.

  • Write a business plan for the next year
  • Fix process issues like billing, job costing, bookkeeping, or technology
  • Set up an online shop
  • Write a marketing plan to rebuild your customer base

Take lessons from the current disaster. What can you do to make the business more resilient? Think about everything from your insurance policies to your debt levels, cash reserves, and the overall size of your operation. Rebuild the business in the most sustainable way you can.

Or making the call to exit

If you’re running low on cash and the business already has a lot of liabilities – such as debt and unpaid bills – then it may not be possible to survive this disaster. It's a tricky decision to make on your own. If you need an expert opinion, find an accountant near you.

Three things to keep in mind

1. There is absolutely no shame in shutting a business down. Especially when disaster strikes.

2. If closure is inevitable, then it’s better to act sooner. Staying open costs money, and debts can follow you around for a lifetime if you’re a sole trader.

3. Your mental wellbeing is one of your greatest assets in life, and trying to trade your way out of a hopeless situation can put that under threat.

Don't forget the people

Whatever happens financially, don't forget the human side of business. Behind each and every business contact is a relationship that can help get you through a disaster. Get ideas on how to maintain business relationships in a crisis.


Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

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