Starting to see lot of posts from Small Business Owners about the severe contraction in cash flows due to the Cornonavirus shutdown.
Unlike large corporations that have a recourse via short term commercial paper to tide over cash flow constraints which is also being supported by The Fed now, Small Business do not have lot of options.
The fundamentals of cash flow management and Working Capital Gap reduction however are the same for all business. This might help.
Fundamentals of cash flow management are the same for a Small Business. This might help during the #Coronavirus contraction.#WorkingCapital Gap by #ProcessISInc #amazon #cashconversioncycle https://t.co/6LTlvJ0QCK
— Shaker Cherukuri (@ProcessISInc) March 18, 2020
Having said that, Small businesses do not have the leverage to negotiate with suppliers, lessors, banks etc. Customers are usually transactional and not in Long Term Contracts. So this poses unique challenges.
There are some levers that can be used. For VC funded startups, the VC might step in if they see viability. For the rest, usually the owner has to use personal resources.
However, before doing that it might help to optimize for the new reality.