So I want to talk about a couple lessons learned during this economic fallout for my business as well as personally.
And the first one is cash is king and cash flow is king. In the past, if I'm able to secure a discount by paying things far in advance, buying for a year of service in advance, a lot of times I do it to save that money. But what I found out now is I paid for a conference, hotel reservations, left deposits for things almost a year in advance that have since been put on hold for an event unlikely to happen and can't get a refund for any of that.
So couple of thousand dollars probably down the drain at that point for me, trying to get a 15 percent discount. So in trying to do that, I lost several thousand dollars. But prepaying for things still not a bad strategy. But you really have to watch your cash flow and think to yourself that you're parting with that money and if something something happens, if I need that money back, will that be a problem? So definitely keep a closer eye on cash flow on your cash reserves because you never know when something like this is going to happen now.
And that cash might be really, really important for your business. And those other people that have your money may not be willing to give it back to you.
The second thing is with banking. Banks always try to encourage you to do all your banking with one bank. They want your personal banking, your business banking with one bank…….have all your relationships.
We've always kept one personal bank account and then with another bank we keep a business bank account. But as you're finding now as a business owner, especially here in the United States, the Paycheck Protection Program, you have to go apply through the bank that you have a relationship with and what a lot of businesses have found, myself included, is that many banks stopped offering it or only offered it to “preferred” customers, despite that being against the rules.
I didn't have to apply for it, thankfully didn't need it, but it didn't matter because my bank, where I have my commercial accounts, decided they're not going to offer it. They offered it very briefly in the beginning and then they cut it off. And now when the second round of stimulus came out, they decided not to even offer it to their clients. So didn't matter. If I did need it, I would be out of luck because it's the only business banking relationship I have.
And they've given zero opportunity for their business customers to apply for a Paycheck Protection Loan. Also, there's other banks where if you didn't have an outstanding loan with them in the first place, even if you only had a savings account or a checking account, unless you had a loan or a line of credit with them, they will not they would not give you that Paycheck Protection Program loan. So same thing. I would definitely not put all my eggs in one banking basket.
So if I have a checking and savings account with one bank and I needed a line of credit, I would definitely consider spreading my relationships with other banks because having all of my banking in one place in this situation would not have worked out for me if I did need that line of credit, if I did need a loan. So I would definitely look at different kinds of relationships and not trust the banks ever and definitely not trust keeping everything with a single bank because you never know when you're going to need those banking relationships.
And as you can see today, unless you have previous banking relationships with them, they will not accept you as a new customer and help you out during during these, you know, during this economic downturn.
The last thing is diversifying your business. And I talked about this in my last video, the businesses that are hurting a lot right now are especially the brick and mortar businesses that were completely shut down. They're not allowed to open and they do not have a secondary source of revenue, of customer acquisition, things like that.
So have a hard look at your business. Luckily for my business, it's pretty much all online and hasn't been affected too much by it. But if you're a brick and mortar business right now, I would definitely start thinking of contingency plans. Well, if my business had to close. What can I do? Can I sell online through e-commerce? Can I do virtual consultations? Can I do Skype calls? Can I do. How can I pick things up?
If for some reason the government, which they have done, they shut down my store. People do not want to go outside now. How can I keep functioning as a business? So definitely start to think of some contingency plans, alternatives and start putting those things into place as soon as possible. You may be thinking this is a once in a lifetime event, but guess what? If it happened once, it very would likely will happen again for other reasons or another pandemic or something like that.
But it's a good opportunity to evaluate your business to see if this happened to me again how can I pivot my business and how can I be prepared where I can sleep, keep functioning, even on a limited basis, to keep customer sales going and keep customer acquisition going?
So just couple of things to think about. If you have any questions, you can contact me at 3Bug Media. But hopefully you're doing well or the best you can during these times. Best of luck with your business getting up and running once this lockup ends.
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