Let’s start with the facts.
FACT 1: The economy of the world is on a downward trajectory due to the Coronavirus disease (COVID-19) and it is really bad because every business – small, medium and big – is being affected. The coming weeks would hit more businesses so bad.
FACT 2: The system that governs businesses – supply and demand – would not stop. This, therefore, means that many other businesses would thrive despite the generally poor performance of businesses all over the world.
FACT 3: The currency value of many countries is dwindling; people are far more desperate to survive and will do almost anything to. This means that lenders would be more empowered to set their own terms. And business owners would be forced to accept them regardless.
So what does this mean for your business?
- Shortage of staff strength: Businesses are run by people and powered by their staff, therefore, there will be a shortage of staff as many health organizations and governments have issued “stay-at-home” advisories due to the high risks of getting infected.
2. Low-income margins: Customers no longer lurk around as they are locked up in their homes, there are no drive-ins and drive-throughs, there is some form of “financial alertness” as everyone is trying to cut down on expenditure.
Some others are access to capital, short supply of raw materials, marketing.
There are many other consequences of the pandemic to businesses but they all boil down to one or both of the reasons mentioned above.
Are those business loans really important at the moment?
YES and NO.
Let me break it down slightly for you.
If you currently own a small business, and as expected sales have dropped by more than half, what are the chances that they will pick up within the next few weeks?
Who knows how many weeks, months maybe that this would last? It’s very uncertain. Individuals and business owners alike are hoping for a vaccine to be found but the truth remains that even if it indeed is found tomorrow, the effect of the pandemic would last for weeks.
When (or when not) to go ahead with that business loan
“Business” will always be business and there are no emotions attached.
Empathy, yes but salesmen would always make sales. This would also be at the detriment of other businesses so before you take that loan, make sure you do the following:
- Know the lender and his/her/its pattern – is it the government? A bigger business? An individual?
- Look at the terms and conditions properly and ensure you can keep to them. Taking a loan and failing to keep up with the agreed terms will only plunge you into further debt and depression.
- Ensure you can make enough sales to keep up and surpass the loan.
If you check all of the above, then you can take the loan else, you should reconsider your decision.
Upcoming: How to Keep Your Business Afloat Amidst the Pandemic
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