?The impact on business means that change ? be that on operations or on entire business models ? is inevitable.?
Navigating the choppy economic watersHow can businesses, particularly SMEs that provide around 60% of all private sector jobs, navigate the choppy economic waters of a new reality shaped by COVID? Undoubtedly, the crisis has spurred a new kind of creativity and risk taking in commerce that might, perhaps, have never have ordinarily come about if the pandemic had never presented itself. Yet, arguably, a pandemic is not the ideal time to road test crazy ideas if the main strategy is to keep cash-flow steady during a period of ongoing uncertainty; just the employment of critical elementary processes that any business can take in order to weather the bad times. These fundamental measures include:
1. Cashflow forecastingIf you?re not already doing so, start a daily, weekly and monthly cash flow forecast so you understand your requirements fully. This can make for sobering read, but by being fully transparent and realistic about your outlook, you can then set aspirational yet achievable financial goals in the short, medium and long terms based on fact – not optimism or hope.
2. Slash your costsReview every expense line from largest to smallest and reduce, negotiate and eliminate costs wherever possible. Renting office spaces, for example, a huge overhead before coronavirus might well be reconsidered. Indeed, some businesses who have actually seen that remote working has benefitted their bottom line, improved work culture and not detracted from performance ? may deem the physical office space as an unnecessary expense if the ?future of work? is largely from home.
3. Renegotiate with suppliers and lendersReview all liabilities (payments) and contract suppliers to renegotiate payment terms that are mutually agreeable to both parties. This is essential for ensuring you do not fall into short term cashflow problems and allows for effective financial planning and forecasting.
4. Search far and wide for fundingExtend your search from funding beyond just loans and grants that have been made available to COVID-affected business. Investigate regional or industry-specific business funding too, as well as crowdfunding and angel investment as additional options.
5. Review all debts (money owed to you)Late payments from clients cause all sorts of headaches for SMEs. Pre-pandemic, this was an issue that saw 78% of businesses being forced to wait over a month beyond agreed payment terms before money owed was settled. Get adept at chasing overdue debts but, at the same time, don?t lose your sense of humanity in the process ? due to COVID there are myriad reasons as to why late payments occur. Liaise with your bank or financier to quickly solve cashflow issues relating to unpaid debt and, if late payments affect your ability to pay suppliers, be as upfront and transparent as possible so that you can renegotiate terms. Going forward, strike good relationships with clients that have a good credit rating for paying on time.
6. Review all assetsLook at stock, equipment and any other assets you think you can sell in order to raise capital in the short term whilst mapping out a plan to recoup those assets in the near future once you?ve become more financially fluid.
7. New cash generating revenue opportunitiesRead, research and reflect on the strengths, weaknesses, opportunities and threats of your business and the sector in which you operate ? particularly in a post-COVID world. Change is inevitable, inescapable even. Use this as a time to determine a plan where you can tweak and diversify your offering, as well as add value for customers in a climate where people will naturally be cautious of spending.
?Ultimately, during this ongoing period of uncertainty, don?t lose sight of the fact that more money needs to be flowing into the business than flowing out in order to keep the lights on.?Measure and evaluate cashflow at all times so that you understand your current financial position and can make informed decisions and ?affordable risks? – not just to keep the business afloat, but to grow it even within economically hostile environments. About Sheryl Miller Sheryl Miller is a business coach and author of Smashing Stereotypes: How To Get Ahead When You?re The Only _____ In The Room. Sheryl is a business advisor, accountant and also a business mentor to C-suite. She has worked with blue chip companies to help them manage issues regarding work culture, as well as diversity & inclusion.
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