Tracking COVID-19 As a Budget Line Item


One of the big questions in the current environment is how it will impact my business?

Let's look beyond some of the health questions to the economic environment. The current environment is abnormal, right? It's not traditional business as usual. So we need some way to measure that impact effectively.

I suggest you create a line item in your financials & call it Covid-19.

Every time you have an expense in your business that relates to this unusual environment, whether it's time spent dealing with a problem, or lost staff hours etc throw that expense into that line item, have a way of actually tracking and measuring this. Why?

#1 as the government continues to assist businesses, you've actually got a good way of measuring what the impact is to your business. You can justify your eligibility for future grants or some form of assistance.

#2 in the medium term, say you plan to sell your business in the next couple of years, costs that relate to this current environment would be an add back.

An add back is where we add back an expense to increase your profit. So, when it comes to valuing your business at some point in the future, we've got a solid way of stripping COVID-19 costs away showing it should not impact your overall valuation for your company. 


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