How you should spend money now


Virtually all small business owners worry about money. But in this COVID-19 environment, with such an uncertain future, money management is even more critical now for the survival of your small business.

So how should you spend your money?

First, a few basic things to remember.

cash is king

If the three most important things in real estate are “location, location, location”, the three most important things in business are “money, money, money”. Normally, a smart business also looks at “profitability” – which product or service lines have the best return on investment. You don’t have time for that right now. Instead, focus on making sales and getting money, even if you have small profit margins. Money in the bank is going to keep you going until times improve (and they will).

credit is king

Most small business owners rightly hate being in debt. But having good credit — and using it wisely — is an important tool in your management toolbox, especially now. Here are three types of credit to use – just use them wisely:

• Lines of credit – having a flexible line of credit to fund short-term purchases is always a good idea. In today’s environment, banks may be hesitant to give you a new LOC, but it doesn’t hurt to ask.

• Credit cards – the dirty little secret is that most small businesses use credit cards to fund business expenses. Me too. Be careful. Credit cards have high interest rates (but not as high as fintech/alternative lenders, which should be avoided). Stay on top of your credit card payments!

• Suppliers/vendors – Talk to the companies you buy your inventory and materials from and discuss a plan for better payment terms. Explain how better terms are part of a well-considered business plan for your long-term survival. They are probably more willing to negotiate than ever. If not, shop around for other vendors eager for new business.

Negotiate everything

I mean everything. These days almost every business is worried about losing customers. They are in the same boat as you and your business: they need cash more than profitability. Now is the time to contact each of the sources you pay for and ask – politely – for a reduction in costs. In some cases, you may need to lower your service level, but that’s probably not a big deal. If they don’t reduce your costs, ask for better payment terms, perhaps allowing you to pay your monthly bills in installments over several months.

Here is a short list of what you should trade:

• To rent

• Telecommunications, cellular and Internet providers

• Online subscription services

• Other services, such as payroll, accounting and web hosting

• Sellers

• Insurance conditions

Look for things you can do without. For example, we got rid of our postage meter a few months ago, saving money each month.

Spend money

While you should watch your spending, don’t get so obsessed with cutting spending that you cut back on the things that make you money or help you survive, like:

• Stay in front of your current customers. You should regularly send email newsletters, post and boost on social media, make calls. Let your current and past customers know how they can buy from you now. Offer discounts, weekly promotions, sell gift cards, provide delivery. Do whatever it takes to get them to open their wallets.

• Marketing to prospects. Inevitably, you will lose customers in this environment, so you also need new ones. History has shown that companies that increase their marketing during economic downturns actually increase their market share.

• Safety and cleanliness. If you have a place of business, be it a retail store, a restaurant, a factory, an office: cleanliness is the first task. Customers and employees will not return if they feel unsafe. If any kind of epidemic occurs in your workplace, you will be even further back than you are now. Spend money for employees to continuously sanitize and provide hand sanitizer and face masks. Require masks on customers for in-person interactions. It is unfair for your employees to force them to interact with customers who are not wearing masks.

• Swivel. You are almost certainly going to have to make changes to your business to meet the new realities of a COVID-19 world. Social distancing and some isolation will last for months, if not years. Spend the money needed to change your business practices to meet the needs of this new world.

Rhonda Abrams is the author of “Successful Business Plan: Secrets & Strategies,” the best-selling business plan guide of all time, just released in its seventh edition. Rhonda was named “Top 30 Global Guru” for startups. Connect with Rhonda on Facebook, Instagram and Twitter @RhondaAbrams. Sign up for Rhonda’s free business advice newsletter at


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