It’s time for many of us to begin thinking about what our businesses will look like from a profit perspective once this mess is over. In making a determination, there are many things to consider.
No More PPP Loans
That’s right. Many might find it hard to believe, but the prospect of Free Money isn’t on the horizon.
No More Employee Retention Credits
Same thing. The gravy train had to end sometime.
Given the unemployment payments that we all had to fight in maintaining a strong workforce, many have had to increase their compensation packages. This is something that isn’t going to go away. It’s not like you can go to your employees and tell them that you’re going to cut their pay.
Many are now in a virtual environment which is reducing productivity. No one will ever be able to convince me that someone working from their dining room table, while the kids are jumping on the bed and screaming in the other room, will make a more productive employee than someone focused in an office environment.
Given the inflation that’s rampant in our economy, I’d be very surprised if your operating costs haven’t increased. Cost of Goods Sold, Utilities, and Transportation Costs have all gone up substantially. They’ve increased and there’s no end in sight.
Few entrepreneurs are doing the same numbers that they were pre-pandemic. Demand for most goods and services is still soft, especially now that the unemployment benefits have gone back to normal levels.
The Perfect Storm
Where does this leave us? Less revenues and more expenses mean one of two things. Either you will soon be operating at a loss, or the deposits you made into your retirement fund will either decrease or vanish entirely.
How To Plan
Please compare your numbers over the same six month period between 2021 and 2020. The individual expense categories used to make your decisions may differ substantially from one entrepreneur to another, but here’s an example to get you started.
1 – Payroll
2 – Cost of Goods Sold
3 – Overhead
4 – Personal Expenses
5 – Sales
Let me leave you with this.
Once you get your results, you may be ready to commit hari-kari, but don’t fret. All is not lost.
Afterall, we’re entrepreneurs. We’re the masters of the ship. There’s still plenty of time to do whatever is necessary to get back on the correct path.
You may not like the job. It isn’t always a good time on a Saturday night, but this is where the rubber hits the road. This is what it’s all about.
Let’s remember that to a great degree, we’ve all done at least a good job in the past eighteen months. When all of this began St. Patrick’s Day of 2020, many didn’t think we’d still be in business, but here we are.
Now we just need to get our businesses back onto some sort of an even keel. It’s a whole new ballgame where your accounting is more important than before.
Adjusting through a situation like this is normally a matter of increasing your revenues and decreasing your expenses. Rarely is it just one or the other.
If you need to cut some people or expenses, get it done. If you need to raise your prices, don’t be afraid. Most or all of your competitors are feeling the same pressures that you are experiencing.
I’m not going to soft-sell this. It’s a scary process. Making moves like this is never easy, but it’s the job. Like it or not, that’s what we all signed on for.
Let’s get it done before we have to start pouring money back into our businesses.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, PPP Loan Forgiveness, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Accounting Solutions Ltd.
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