If the COVID-19 outbreak has taught us anything about our businesses, it’s that owners must begin making a more in-depth examination on how they prepare financially for such extreme scenarios.

Small Businesses are most prone to financial exposure when a financial crisis occurs. With the COVID-19 outbreak, there are options to assist in keeping your business finances in tact by exploring Small Business Loans, Public Donations, and other means.

But what happens when an individualized, unforeseen financial crisis occurs? Does your business have a financial plan if you were forced to take a leave of absence because of an emergency?

Learning Through Experience

Several years ago, while working as the Director of Operations for an independent pharmacy, the owner of the business was in a car accident. Because of the accident, he was subsequently forced to be out of work for six months. Unfortunately, the owner did not have a financial plan in place and we were thrust into a situation where we struggled in the early part of his recovery to stabilize the financial flow of the business.

The owner is a licensed pharmacist which was the major issue and required hiring temporary pharmacists at a rate of $65 per hour. The store was open to the public 70 hours per week, which, having to hire and pay a licensed pharmacist to be on the premises during these hours amounted to an unexpected expenditure of more than $4,500 per week! Absent for six months, the amount it cost the owner to hire and pay temporary pharmacists was at a rate of almost $120,000! What’s more is this number doesn’t include the number of hours needed by other employees to increase their workload to cover other facets of the business.

A portion was covered by insurance, but not close to the unforeseen financial cost. Please note, I am aware that not all businesses require this type of assistance in terms of financial compensation for a temporary employee, but it provides insight into the devastating cost of an individualized financial crisis for a small business. With some financial engineering and some employees (myself included) deferring pay, the business survived, but today they are still attempting to recoup the financial loss experienced during this time.

READ: What Business Owners Can Do During This Economic Slowdown

How Can You Plan?

There is no one easy approach to plan for this type of situation as all businesses are financially unique, but a simple rule would be to approach an unforeseen financial situation in the same regard you would approach saving for your personal retirement.

Below are a few suggestions to consider when developing a financial plan:

*CREATE CASH RESERVES: Saving a percentage of net profits monthly, if this can be afforded, over time can help secure the liquidity needed to handle an isolated financial crisis if one is ever posed.

MAINTAIN GOOD CREDIT: Maintaining a high credit rating in the event you have to secure a business loan will give your application a better chance of being approved and help reduce costs if a loan is ever needed.

IDENTIFY RESOURCES: It is imperative that you have an understanding of which individuals and entities you can turn to in the event of a financial emergency. Which bank will you turn to for financial assistance if it is needed? Who within your organization do you trust to assume your role and operate your business? These are questions you can ask and be proactive about.

REVISE, REVISE, REVISE: As your business changes, so to should your financial plan. It is recommended to be revisited and reevaluated every six to twelve months or if there is a change in management, business expenditures, business plans, etc. And, like a crisis management plan, all employees should be aware there is a plan in place and where they can find it.

*We strongly recommend that your financial options be discussed with your Financial Planner, Accountant, or Tax Adviser on how to best plan and save for a potential financial crisis, as they are the most versed in your day-to-day finances.


Most business owners do not have a financial contingency plan in place because owners often prioritize other facets of their business and are not prepared if an emergency occurs. This is not because of lack of wanting, but because of a lack of time to address this particular aspect of their business. When weeks are consumed with sales, scheduling, work/life balance, customer attention, employee related functions, etc., it is easy to permit this crucial detail to slide down the list of priorities.

But, it is important to take the lessons we are learning now during this unforeseen financial crisis, and apply them to ensure the future financial success of your business.

K-CORE Consulting, LLC offers a FREE, NO HASSLE – NO OBLIGATION CONSULTATION to any Business Owner seeking guidance. Whether you are just starting out, or you’ve been in business for 30 years, it never hurts to be sure you are getting the most out of your business.


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