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How to cut cost amidst the COVID-19 pandemic

An increase in expenses followed by a decrease in income calls for a serious cost reduction.



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When people say ‘unforeseen circumstances,’ nobody ever imagined an unforeseen circumstance would be as huge as the Covid-19 pandemic. The pandemic brought with it, a lot of unimaginable and unexpected changes, especially to the economy; the Covid-19 pandemic has had a great toll on the world’s economy. While some industries like the; gaming, media, and healthcare industries are thriving during the Covid-19 pandemic, some companies are experiencing a huge decline that would make them resort to cutting cost.

An increase in expenses followed by a decrease in income, calls for a serious cost reduction. Companies that want to stay in business and want to have saved enough for post-pandemic have to strategically cut costs. It is not as easy as it sounds because cutting costs means stepping on some toes but it is the most logical thing for all businesses to do.

Below are some ways you can cut costs amidst the pandemic:

Get cost-cutting ideas from your employees 

The first and most important thing to do is get ideas from your employees on how to cut cost. Doing this will make them understand that the company cares for them and is interested in their opinion. Many of them might end up volunteering for a pay cut or unpaid leave because you have put them in a situation where they can empathize with the company. At this point, they won’t have any problem with the decisions you make even if it is going to affect them at the end of the day.

Partner with other businesses that are not competitions 

If you have a small and growing business that might be significantly affected by the pandemic, you can partner with another business that is not a competition. For instance, you can share your workspace, internet, equipment and other essential things with another company to reduce rent and other costs. If the system works for you, you can continue with the arrangement post-pandemic.

Cut non-essential spendings

Cut all spendings that don’t contribute to the growth of your business directly. Apply the rule – “if we can do without it, we don’t need it” – to your business.

Try alternative and cheaper ways of operating

Businesses can cut back on expensive tools or methods of operating. For instance, if your business relies on marketing, you can try affordable marketing strategies that won’t cost you a fortune and would still help you to remain visible in the business world. Covid-19 has proven that email marketing and social media are effective marketing tools, and many businesses should adopt these tools to remain relevant in their industries. You can also replace other expensive methods of operation with cheaper ones.

Reduce payroll expenses

A company’s payroll makes up to 15 to 30 per cent of their gross revenue. According to Secondwind Consultants, businesses fail when their payroll exceeds 30% of their gross revenue. Businesses can cut payroll expenses by cutting some bonuses, compensations and incentives enjoyed by the employees. Companies can also introduce remote working, part-time work or limited days to reduce pay. These measures, as unpleasant as they might be for the employees, are good ways for businesses to remain strong amidst the pandemic.

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Renegotiate fixed fees


The pandemic has forced many to be considerate and understanding, therefore, business owners should seize the opportunity to renegotiate some fixed fees like rent and subscriptions. While renegotiating might be favourable for some, it might not yield any result for others. However, it won’t cost you anything to hope and see if you can reduce cost through this method.

Establish a hiring freeze

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If you are not in the health care industry and other thriving industries, the last thing you need in your company during the pandemic is a new workforce. Companies can encourage and train their employees to take on other roles pending the time things go back to ‘normal.’

Reduce the company’s workforce

As heartbreaking as this might sound, to cut cost, some companies may have to lay off or terminate some of their employees. However, this should be the last option for any company looking to cut cost.

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This period is not the time for businesses and their employees to live in luxury. It is the time to get rid of the non-essential and unimportant things companies invest their money in. What all businesses should strive for at this stage is; coming out of the pandemic strong, if possible, stronger than they were.

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Personal Finance

5C’s of creditworthiness: What lenders, Investors look for in a business plan

Business owners need to be aware of the criteria lenders and investors use when evaluating the creditworthiness of entrepreneurs seeking financing.



Five things to consider before securing a loan

Banks usually are not a new venture’s sole source of capital because a bank’s return is limited by the interest rate it negotiates, but its risk could be the entire amount of the loan if the new business fails. Once a business is operational and has an established financial track record, banks become a regular source of financing.

For this reason, the small business owner needs to be aware of the criteria lenders and investors use when evaluating the creditworthiness of entrepreneurs seeking financing.

Will the business that an entrepreneur actually creates look exactly like the company described in the business plan? Of course, not.

The real value in preparing a business plan is not so much in the finished document itself but in the process it goes through – a process in which the entrepreneur learns how to compete successfully in the marketplace. In addition, a solid plan is essential to raising the capital needed to start a business; lenders and investors demand it.

Lenders and investors refer to these criteria as the five C’s of credit.

READ: 5 ways to raise funding for your business

1. Capital: A small business must have a stable income base before any lender is willing to grant a loan. Otherwise, the lender would not be making, in effect, a capital investment in the business. Most banks refuse to make loans that are capital investment because the potential for return on the investment is limited strictly on the interest on the loan, and the potential loss would probably exceed the reward. In addition, the most common reasons that banks give for rejecting small business loan applications are undercapitalization or too much debt. Banks expect a small company to have an equity base investment by the owner(s) that will help support the venture during times of financial strain, which are common during the start-up and growth phases of a business. Lenders and investors see capital as a risk-sharing strategy with entrepreneurs.

2. Capacity: A synonym for capital is cash flow. Lenders and investors must be convinced of the firm’s ability to meet its regular financial obligation and to repay loans, and that takes cash. More small businesses fail from lack of cash than from lack of profit. It is possible for a company to be showing a profit and still have no cash – that is, to be bankrupt. Lenders expect small businesses to pass the test of liquidity, especially for short term loans. Potential lenders and investors examine closely a small company’s cash flow position to decide whether it has the capacity necessary to survive until it can sustain itself.

READ: How to scale as a small business on a budget

3. Collateral: Collateral includes any asset an entrepreneur pledges to a lender as security for repayment of a loan. If the company defaults on a loan, the lender has the right to sell the collateral and use the proceeds to satisfy the loan. Typically, banks make much unsecured loans (those not backed up by collateral) to business start-ups. Bankers view the entrepreneurs’ willingness to pledge collateral (personal or business assets) as an indication of their dedication to making the venture a success. A sound business plan can improve a banker’s attitude towards venture.

4. Character: Before extending a loan or making an investment in a small business, lenders and investors must be satisfied with an entrepreneur’s character. The evaluation of character frequently is based on intangible factors such as honesty, integrity, competence, polish, determination, intelligence, and ability. Although the qualities judged are abstract, this evaluation plays a critical role in the decision to put money into a business or not.

READ: 7 Ways to pay for your higher education

5. Conditions: The conditions surrounding a funding request also affects an entrepreneur’s chances of receiving financing. Lenders and investors consider factors relating to a business’ operation such as potential growth in the market, competition, location, strength, weakness, opportunities and threats. Another important condition influencing the banks is the shape of the overall economy, including interest rate levels, inflation rate, and demand for money. Although these factors are beyond an entrepreneur’s control, they still are an important component in a banker’s decision.

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The higher a smaller business scores on the five C’s, the greater its chances of receiving a loan.



Written by Chukwuma Aguwa

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Personal Finance

Don’t be fooled by COVID-related scams

Always consult the institution in charge of health-related matters to confirm any fishy information you come across.



The nature of and the manifestation of the Covid-19 disease is such that there’s only a little time available to remedy the situation before it gets chronic. Although the infection begins by exhibiting mild symptoms, if you do nothing in a short time, it could lead to death in a matter of days.

This whole picture has caused many to become desperate about Covid-related issues, launching into panic mode at the sight of any information. As a result, such people are not far away from falling for fraudsters.

With the different kinds of news flying around, you mustn’t be fooled by Covid-related scams.

The Coronavirus threatens the health of millions of people around the world daily, also killing thousands along the way. To curb the spread and remedy the situation, bodies like the CDC, WHO, and every country’s local health organisation like the NCDC, frequently circulate information around communities. However, it has also led to fraudsters taking advantage to provide fake news, and even asking for donations.

Each day, there seems to be a new account or NGO asking for donations into the health sector, and though some are legit, many are just fraudsters posing to take advantage of innocent citizens. So far, numerous complaints about scams have been recorded, especially with people who are looking to support the health cause in any way they can.

Channels used for COVID-related scams 

There are three major ways scammers take advantage of the haziness of the situation to dupe people. To start with, they appeal to the emotions of humans, who see the high death toll and suffering. As a result of what is happening, people have been willing to donate funds for medical supplies, isolation centres, and financial compensation for medical workers.

Scammers take advantage of this by posing as charity organisations and solicit for funds. Most times, as soon as their target is met, they clear their footprint without leaving a trace behind.

Another way they scam people is by manufacturing and selling fake or low-quality health products. Everyone wants to get their hands on a cure, or something that can at least protect them from the virus, and scammers are meeting their needs by providing just that.

The World Health Organization currently approves only one vaccine, and any other thing outside it is outrightly fake or just a supplement that will help your body. Currently, only the Pfizer vaccine is clinically tested and approved to work. Be sure to not throw your money in the wind by purchasing some of these fake drugs around.

Lastly, scammers create systems to extract a patient’s personal information, thereby having access to the person’s true identity. It could be in the simple form of opening a registration portal where you supply all your details.

Therefore, only give information to approved bodies and not any random online site that appears legit. These fraudulent individuals can do a lot of damage to your identity. Stay vigilant, only communicate with approved bodies, and always ask questions if you are not sure or suspect foul play.

The place of electronics in COVID-related scams

These fraudsters usually reach out to you through the digital sphere. Hence, watch out for cold calls, text messages, or emails requesting donations to certain bodies. The best way to confirm the legitimacy of such a message is to visit the organisation’s official website in a different browser. Never follow the link in the mail or text directly, as it can be easily embedded with spyware. Therefore, a single click could see them extract all your personal information, including bank details.

Also, please stay away from those who claim to have a cure, and accompany it with testimonies of people who have used it. They are low graders desperate for your money. Vet them by searching online and see what people are saying. In all, always look out for suspicious messages, and opt out if you are sceptical.

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In a nutshell, you should not believe any cure, vaccine or supplement that the World Health Organization does not approve of.



The government or legit health institutions do not cold call citizens to request donations or coerce them into making one. If you receive a call out of the blues, chances are it’s a scam, which is why they mostly try to hurry you to donate before you realise it. Always consult the institution in charge of health-related matters to confirm any fishy information you come across.

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