Woodkirk Stone
Accounting and finance professionals have the opportunity to focus their attention on helping small businesses cope with the lingering effects of the COVID-19 pandemic. Because accounting and finance professionals are inherently great 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 their cash flow diligently. Contact the company’s banker about convenient payments that don’t incur significant transaction fees. Small businesses may offer early payment discounts if the business has a cash flow crisis. Some small businesses may be eligible for local or federal grants to help them continue to operate in the next year.
Customer relationships
Small businesses should contact customers to receive feedback on their products and services and customer needs. Small businesses must meet the urgent needs of their customers and maintain ongoing relationships with them to keep marketing and selling costs low. Online forums, social media, email, and video conferencing are ways to stay in touch with consumers and receive feedback.
Small businesses should collect customer data by asking these five basic questions:
Who are my best clients? This information makes it possible to define whether they have common characteristics such as age, income level, industry, etc.
What are they buying ? Identifying the specific products or services that customers purchase will help the business to refine its services and product offerings.
Where do customers buy and use these products and services? Small businesses should consider whether customers are purchasing products and services through the company’s website, through a third-party reseller, in a physical location, or through another channel.
How do my customers find my products and services? Small businesses need to segment customers based on how they find the business, whether through referrals, marketing, advertising, direct sales, etc.
Why are customers buying from this company? This question is perhaps the most important because it provides insight into the company’s unique selling proposition. If the main reason customers buy from the company is because the price is lower than that of its competitors, there is little opportunity for customer loyalty.
The goal is to identify areas that improve customer satisfaction. Small and medium-sized businesses can have an advantage over large companies in their ability to cultivate strong, personalized customer relationships, and this is where differentiation can be achieved.
Accounting and finance professionals can deliver the most valuable customer relationship insights through data analysis and organization. Data analysis and visual presentation of data help management make more informed decisions about the target market and how to more effectively meet customer needs. The more limited a small business has resources, 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 offering to better meet emerging customer needs.
Workforce Development
In addition to customer relationships, employee relationships are imperative for small businesses. Recent challenges have made it difficult to attract workers and maintain a cohesive workforce. Small organizations can offer accommodating benefits, such as additional paid time off, relaxed work schedules, service-based bonuses, and a personal company culture. When a work-from-home arrangement is possible, it can provide the kind of flexibility that workers today expect. Cross-training employees to fill multiple roles can ensure that work can be completed when employees are on leave or unavailable for work.
Additionally, managers may want to develop relationships with contractors and professional service providers who are available to fill gaps during labor shortages. Accounting and finance professionals can help management develop profitable hiring programs and competitive salary and benefit packages, and negotiate contractor fees and recruiting resources.
Risk management
Managers should discuss their liability risk and the potential need for additional benefits with insurers. To avoid confusion and costly conflict, small businesses should document required workplace policies, procedures and safety measures, especially with regard to COVID-19 protocols.
One of the most crucial areas of risk management is insuring against the risk of losing a key vendor or service provider. Management accountants and finance professionals can assess the profitability of insurance policies to protect the small business from loss of revenue or other consequences of the loss of a key supplier.
Supply chain issues
Small businesses may want to consider mergers and acquisitions that allow vertical integration to better control the supply chain and end-consumer relationships. When vertical integration is not possible, contracts with vendors and backup vendors can ensure business continuity in the event of a shortage.
The just-in-time inventory systems strategy can be outdated, as supply shortages and logistics do not provide assurance that inventory can be replenished in a timely manner. Small businesses need to rethink their current inventory levels and economic order quantity threshold. As projects are planned, accounting and finance professionals can communicate with potential suppliers and service providers about delivery quantities and schedule. These discussions in advance of an urgent need for goods and services can avoid stockouts and project delays. Proactive businesses can ask suppliers to alert the accounting department when inventory is low, logistics are delayed, or prices change. In particular, management controllers help decision-making by calculating the effects of price variations and variations in the availability of goods.
Cost accounting
Based on changes in target markets, changes in business operations, and technology upgrades, accounting and finance professionals can work with managers to determine the costs associated with each change. Prioritizing investment projects, the likelihood of results, and analyzing costs versus benefits are areas where accountants can offer insightful reports. Based on analyzes, reports and expectations, cash flow can be allocated to the business plan. Timely, relevant and accurate reporting is essential for the success of a small business, especially since resources are even more limited.
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 today’s challenges serve the ultimate goal of meeting customer needs while making a profit. Gratitude to the customer transcends the fear of uncertainty.