Safeguarding your business finances during COVID-19

1st April 2020


South Africa has been placed on a 21-day nationwide military-patrolled lockdown, and like many businesses in South Africa, you’ve most likely closed shop, and let your customers know that your business won’t be operating during the lockdown.

It’s now time to look at the state of your business finances and find ways to help your business survive not only the 21-day lockdown but the rest of the year. Here is a four-step checklist of things you should do to keep your books balanced or to help you make decisions about the continuation of your business.

Step 1: Expense Management

Expense management is likely to be one of the first things that you have considered in the lead up to the lockdown and you might have already cut back expenses where you could. If not, start by using your bank statements, invoices, and receipts to draw up a list of your expenses. 

Sort your expenses into three categories: fixed, variable and periodical to help you manage your budget effectively.

What are Fixed Expenses?

Monthly or recurring expenses that stay the same month to month. Click to see examples.

What are Fixed Expenses?

Examples: Rent, Internet, Phone, Insurance, Employee salaries, Loan repayments.

What are Variable Expenses?

Expenses that help you cover your businesses needs. Click to see examples.

What are Variable Expenses?

Examples: Utilities, Electricity, Petrol, Office supplies, Cost of materials.

What are Periodical Expenses?

Expenses that crop up monthly, quarterly, or annually. Click to see examples.

What are Periodical Expenses?

Examples: Car license disc, Taxes, Insurance premiums, Vehicle repairs, Maintenance costs.

Look back over the last 3 months of business expenses, and create average costs per month for each of these items. This will help you forecast what your upcoming expenses might look like. 

Once you have a forecast, you will be able to calculate shortfalls and begin making expenses adjustments where possible. At the end of this, you want to cut your business expenses down to be as lean as possible. You might find more unnecessary spending than you think! 

Going forward, keep a close eye on how well you predicted your expenses. You will need to continue this step until trading gets back to normal. 

Tools such as Expensify or Xpenditure can help you keep track of all your expenses and stay on the ball when it comes to all the money leaving your business. 

Step 2: Revenue Management

Revenue management might seem complicated but as a business owner, it’s likely that you’ve been doing it all along. Your revenue management strategy helps you keep the right product or service on the shelves at the right price. The more familiar you become with the context in which you operate, your customers and competitors, the more this becomes a natural skill. 

However, the outbreak of COVID-19 and the nationwide lockdown will mean relooking this strategy to ensure that your business has the best restart possible. The next few weeks are a good time to start thinking of ways in which you can increase your business’s revenue and explore new revenue sources. 

Try to imagine the future your business will exist in. Does it still make sense? What will customers want most and can you provide it? You can lean on past experiences, talk to other business owners around you, and be creative, and you might find unexpected ways to unlock more revenue. 

You can also use this time to go through your business processes and find ways to improve your product cost to profit ratio. Or, you can think of ways to improve or better your product so that a re-opening drives better traffic – real or online. 

Step 3: Profitability Analysis

Your business will be losing money over the next few weeks, so looking at your costs and revenue will help you determine profits and hopefully find a way to rebalance the books. 

Before we jump into any numbers start with a little research into the effects of COVID-19 on  your industry. If you’re a within an essential service class this will affect you differently compared to businesses forced to close for lockdown. What has the pandemic meant for your industry? In this context, evaluate your business profit margin and operating costs. 

This is the part that will be especially difficult because it’s from here that you may have to take serious and devastating decisions. If the numbers and industry point to it, you may have to restart your business from scratch once the outbreak is contained. No matter what, try to look to the future positively, with the same entrepreneurial spirit that made you start your business. 

A few questions to consider:

  • What does your financial runway look like? Can you knuckle down and get through the lockdown or are you out of funding? 
  • Can you make financial cutbacks in your business to remain afloat, even on lean terms? 
  • Do you have an alternative source of income to help you finance or fund your business through this time? Can you seek formal funding?
  • Do you have any private relief solutions from your banks, suppliers, or landlords?

Step 4: Cash flow forecasting

Now that you have control of your expenses, you know your profitability, and you have some ideas about how to move forward, it’s time to forecast for the future. 

  1. Implement expense cuts where you can 
  2. Start conversations with your suppliers, investors, and other partners
  3. Try to negotiate relief on your bond, rent, and debt by letting institutions know that COVID-19 has impacted your business and ability to make repayments 
  4. Start researching funding opportunities applicable to you 
  5. Join Yoco online and learn how to turn your business ideas into innovation

These are processes will need to be repeated until we are out of lockdown and can start trading more normally. 

This guide from Deloitte offers a deep dive into cash flow management during a time of crisis. Have a look if you’d like to deepen your financial literacy. 


Make sure to follow us on social media as we unpack small business finances and funding in more detail in coming blogs! You can find us on Facebook, Instagram, or Twitter


Yoco is an African technology company that builds tools and services to help small businesses get paid, run their business better, and grow. We believe that by opening up more possibilities for entrepreneurs to be successful, we can help create more jobs, enable people to thrive and help to drive our economy forward.