Companies have gone out of business as a result of the unexpected Covid-19 compulsory shutdown sometime in March 2020.
Having operating cash is crucial for the survival of any business. Are you able to generate more income than those expenses knocking at your door and staring at you every month?
Some companies survived on their 30 to 60 days invoices due before the lockdown. It was difficult to get timely payments of those invoices, but it was guaranteed lifeline for businesses until they eventually run out.
Cancelled contracts, discontinued subscriptions became the everyday reality. Business owners are freaking out. Unemployment rate is on the rise globally as employees were laid off. They just can’t afford to pay.
The Global Capital market was a mess between 2006 to 2008 but cannot be compared to the time we are in now.
How can you stay Liquid in these times?
- Micromanage Cash: Until we find a vaccine for the Corona Virus liquidity is of utmost importance during this period.
- Save ruthlessly: If this season has taught you anything, it would be the value of having a sizeable amount of money stashed in savings.
- Diversify your investments: You might have to rethink your revenue streams. Don’t put all your eggs in one basket.
The big winners, in the end, would be private equity companies who are always on the lookout for struggling businesses to buy. Liquidity problems will mean that you can buy out some companies at a decent price and make a lot of money when these companies are flipped in the next three to seven years.