Now that the country is in lock down, many of us have stopped trading and are bracing ourselves for a huge drop in income and a massive dent in our cash flow. Now is probably a good time for you to take stock of where your business is currently, and what you can start doing to help your business survive Coronavirus and the impact it is going to have on the economy afterwards.
Focus on CashFlow.
Don’t worry about profits, turnover or any other measure that might have been important in the past, only cash matters now. Look for every opportunity to retain cash within the business; to maximise incoming cash and to reduce / defer outgoings. Review your credit policies and the credit histories of customers. Remember that you do not have to extend credit to anyone. Make sure you invoice promptly and take measures to encourage prompt payment such as sending overdue notices as soon as a debt is due and ensuring regular follow up.
Analyse all your outgoings – what’s essential for the continued survival of the business and what isn’t? Reduce, defer or cut entirely the latter, including your own remuneration and be as brutal as you can as the crisis could easily last 3-6 months. Produce short and medium term cash flow forecasts and ensure everyone in the business works hard to stick to them.
Review Inventory Management Practices.
See what can be done to reduce inventory costs without sacrificing the quality of goods or inconveniencing customers. Are you ordering too many of particular items so that you have cash tied up on your shelves? Can an item be sourced somewhere else at a better price? Is there a drop-shipping alternative that will work for you, eliminating shipping and warehousing costs?
Just because you’ve always ordered something from a particular supplier or done things in a particular way doesn’t mean you have to keep doing them that way – especially when those other ways may save you money.
Remember you are not alone.
COVID-19 will be causing stress and worry for small businesses and the self-employed, and it is more important than ever to make sure you are taking steps to support your own mental health as well as that of any employees you may have.Try not to feel overwhelmed and panic. Take short steps, small actions, not big leaps. Talk to and watch what others do in and outside of your sector. Take support and ideas for dealing with this crisis from anywhere and everywhere you can, no one has the complete answer.
Ask yourself, what could bring your business down, which of your competitors are going to survive and why?
Ask yourself what you can change quickly, and how to be that survivor. Be bold and look for new ways of operating. Be innovative and flexible, what ‘new’ technologies can you use?
However, that’s not to say that you should simply diversify your business. It might be better to re-focus on your core offerings. Breaking into new markets, even during a growth economy, can be risky and requires a strong focus on research and development. By putting the majority of your time and energy into core offerings, you’ll remain the best at what you already do well and maintain customer and client loyalty along the way.
Look after your staff.
One of the common issues with widespread remote working is the risk of staff feeling isolated. Employers must therefore ensure they keep in touch with their team regularly, and not just to establish they are actually working! Where possible, encourage staff to communicate with video-conferencing facilities such as Skype and Facetime. The ability to make eye contact, and to read facial cues and body language, adds an additional layer of connection which can’t be achieved over the phone
Work with your key suppliers and customers.
Ask them what they are doing and how you can work together to get through this. Keep communicating with everyone who’s important to your business… your customers, your suppliers, your staff, your funders. Remember that they too are probably experiencing the same things as you are, having to make similar, often tough, decisions. Reassure them and be honest, open and realistic.
Grab all the government support you can get.
HMRC have been told by the government to support companies effected by Coronavirus. A hotline has been set up to ask for a time to pay arrangement: 0800 015 9559. Follow us on Social Media to get the latest news and updates about the government assistance that you are eligible for.
Don’t let your guard down.
For example, if your staff work from home, ensure you remain protected from hackers as they will be looking to take advantage of any weaknesses now.
Document your decisions
Make sure you keep records of any decisions you have reached in case your plans do not work out and an insolvency practitioner is appointed down the line who may look at what you’ve been doing. Think about a formal insolvency process only as a last resort – all insolvency processes damage the business, everything you’ve worked so hard for. But if you do need some insolvency advice, please get in touch on 01736 755107