We know that every small business owner is feeling worried and challenged at the moment. But here are a number of key actions that you can take right away to minimise the damage to your business in the coming weeks.
Check for solvency
First, decide how long you can last if there is a big downturn. This means how much cash is collectible from customers, your bank balances and the amount you owe suppliers and HMRC.
If you have net cash reserves this is good news. This should provide you with more room to manoeuvre in the coming months, even if your turnover drops in the short-term.
If you have more liabilities than assets you will need to consider your options, and quickly. You will be especially vulnerable to a reduction in sales and profitability.
We have all set up our businesses based on a few basic assumptions, which does not include our customers working from home and self-isolating.
You need to consider new income streams for your business in order to make use and retain your hard-won resources.
Some SMEs will go under. We would rather it wasn’t you.
Next, take a realistic look at your planning options.
Planning your cash flow
Any cash reserves you have will quickly disappear if your business is making a loss.
Talk to customers and suppliers NOW. Agree longer but more frequent (maybe weekly) repayments terms to suppliers and chase in any late customer debts. The purpose is to keep the whole chain moving, even if a little slower. You need supplies and they need you as a customer. Same for customers, so make it easier for suppliers to supply and for customers to pay. Move to direct debit (GoCardless perhaps) for customers and offer the same to suppliers. Make sure you are the easy people to do business with, so ensuring you keep trading.
Review your cash flow for the next few months.
Sell anything that you don’t need – surplus stock, odd bits of machinery you use once in a blue moon. Some businesses are already selling vouchers for later use – that doesn’t have to be only retail. You might sell discounted vouchers for services. Anything to keep cash flow going, keep people in jobs so when the upturn comes, you are prepared and can thrive.
Look at your costs. This only really works once, but it should still be done. Expect major disruption for six months, maybe more.
Do a cash flow forecast and amend it monthly to see where you are going. Events are moving fast, and you need to be able to remember your assumptions at the time so you can plan for the future better.
Talk to your bank NOW and tell them what you are doing. Even if you don’t think you will need support. Later, you may need them, and they are more likely to support a well-run business. So, tell your bank what steps you are taking and keep them up to date with progress. A simple email to your bank manager will do.
If you do think you will need support, get in quickly before everyone else does.
Check your insurance policy for business interruption cover. The normal definition of interruption has been changed so you may qualify even if your business doesn’t stop but just continues at a reduced level. Talk to your insurance broker NOW.
Leadership and hope
Show leadership in these troubling times. Inspire hope. In your people. In your customers and suppliers. Show support now. Don’t lend a hand. Be the hand. (thank you Mark Schaefer)
What can you do to support your suppliers and customers? Everyone thinks everything is out of kilter. It is. There is no fixed point around which their lives can coalesce. Provide a rock they can cling to. Until they can see their world re-form around them and by implication their rock – you.
What nice thing can you do for them that they would appreciate?
Don’t wait for permission, act as a leader now.
Timing is everything
Everyone now working at home will be thinking about a side project or trying to do their whole business online. The noise will be deafening when they all launch. New things in these circumstances are not viewed well. People stick to tried and tested. So like baby turtles trying to get to the sea, all these new ideas will be threatened by many predators. Remember some turtles only survive by weight of number NOT excellence. Don’t launch too soon!
People First Not Profits
We are set up for remote working, and we believe in people before fees. So, if you think you need help, ask. And if you don’t think you need help, ask. It will be FREELY given. The virus has shown how interrelated we all are. We want to support our business community, clients and non-clients alike. We are good in a crisis. Call us.