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5 Steps Toward Small Business Financial Recovery After COVID-19

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By: Lorraine Romano
VP Business Banking & Member Development

It will be several years before we fully realize the economic impact of COVID-19, but what’s painfully clear right now is that small businesses across the country face an uphill fight as states begin to reopen and return to a state of normalcy – or establish a new normal.

While both the short-term timeline and outlook vary widely by industry, it’s important for every small business to have a post-pandemic plan in place now so you’re prepared to hit the ground running toward recovery.

Here are five steps to help you get started on your way to small business financial recovery.

1. Assess the (financial) damage. The first step to rebuilding in the wake of COVID-19 is to determine just how deeply your small business has been impacted. Start with updating your financial statements and then compare them to last year. It’s possible the damage isn’t as bad as you think it is. Also, beyond the hard numbers, including sales, profits and cash flow, consider other ways your business was affected, such as employee headcount or losses in market share. You’ll need to account for these variables in your rebuilding plan.

Analyzing how your overall industry has been affected by the pandemic is also helpful. By looking at your competitors and the market as a whole, you may be surprised to find a new opportunity.

2. Determine your obligations to adhere to new health and safety standards. Unfortunately, reopening your doors isn’t as simple as turning the key. Educate yourself about what’s required by local and federal government regulations and consider the steps you’ll need to take – and financial investments you may need to make. While the guidelines vary greatly by industry, it’s likely that both physical and operational changes are necessary to help ensure the health, safety and welfare of employees and customers.

3. Rework your budget and establish a realistic timeline for rebuilding. You may need to spend money before you can make money, especially considering government guidelines for reopening. Do you need to (re)hire and train employees? Restock inventory? Rev up your marketing machine? Suffice to say, there are likely numerous things you need – and want – to do to accelerate recovery in the wake of COVID-19. However, doing everything at once is probably not possible. Prioritize jobs and expenses, and then establish a timeline for action accordingly. Be realistic and prudent. Your immediate need may be funding. Secure capital before you begin (re)hiring employees and restocking inventory, for example.

Also, as you take steps toward your small business financial recovery and your situation begins to stabilize, remember to track and evaluate your progress. What’s working? What’s not? Consider setting incremental goals (possibly in 6, 12 or 18-month timeframes).

4. Consider if/how much funding you’ll need to recover. Unless you had a large amount of cash going into the pandemic, most small businesses are finding they need some liquid capital to jump-start their way out of it. Federal relief funds, such as Economic Injury Disaster Loans (EIDL) and the Paycheck Protection Program (PPP), are limited and/or are depleted, making it critical to consider other resources for financial aid. SBA.gov1 is a great resource as it provides a plethora of information. You should also contact your financial institution for more personalized guidance. Affinity’s team of business bankers, for example, will take the time to understand how COVID-19 is impacting your business specifically so they can recommend the right combination of products and services to help you recover, rebuild and ultimately achieve your business goals.

5. Create a contingency plan for the next crisis. While we all hope this pandemic is a once-in-a-lifetime crisis, disruptions to small businesses are inevitable. Once you’re back on your feet financially, take the time to prepare for future shocks and worst-case scenarios. For example, if you had little or no liquid savings from which to draw when COVID-19 hit, building up reserves might be a priority. Or you may decide paying down debt needs to be your focus. The more you do now to prepare for what might come down the road, the better your odds of not only surviving but thriving during tough times.

As a small business owner, it’s important to look beyond the current chaos and reflect on lessons learned. Now is the time to focus on the fundamentals of running a successful operation. It’s okay – even recommended – to get “back to basics.” Above all, remember that you’re not in this alone. Almost every person and business worldwide are adjusting to new ways of living and working.                                                  

This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made.  

1 Retrieved from