At Sempar we are over three weeks in to remote working now and we have largely spent those three weeks talking to our clients, advising on government incentives, commercial issues and the usual tax and accounting advice. From our discussions it appears most business fall into 3 categories:
- Your business has closed due to COVID-19
- You are trying to continue as you were before
- Your business is trading but with your team at home
Whichever category your business fits in to it is difficult to see past the end of the next 3-4 weeks, so how do you start to formulate a plan to take your business through the next 6-12 months? I’m sure this is a question going round most our clients’ minds right now.
Below are our four important planning tips on managing your way through this uncertainty:
Know your Mindset
Before we get into the plan we must first address mindset. It’s really easy to get dragged into all the negativity on the news, the TV channels will be very focused on the number of deaths in a shock and awe way of fearing the British public into a firm lockdown. If you carry this negative state into your business it will mean you will expect the worst for your business too and it’ll be very difficult for you to see the way out and ultimately struggle to see the opportunities that are inevitably in front of you.
There will be some that know the opportunities exist and lie ahead and will be approaching this time very positively. Looking for the opportunities is important but it’s really important not to forget the present. In fact, the ideal plan is to have a balanced mindset.
The key is to manage what’s going on week to week with agility, being able to have multiple short-term plans that you can swap between as critical factors change and evolve. But at the same time thinking strategically about what your ultimate bounce-back looks like, what will need to be in place for you to achieve this and what your cash flow will need to look like.
Cash is King
In times of uncertainty doing what it takes to surround yourself with cash is important, here are some factors to consider:-
- Cash will give you the confidence to pick your head up from the emotion of the crisis to be able to see your business more clearly and see opportunities as they present themselves, and critically have the cash flow to take them forward.
- Cash gives you time, and the lack of cash creates fear. Fear is an emotion which will create extra uncertainty making the outlook even more unclear.
- If your business is cash-rich, protect this balance by looking at non-critical overheads and ensuring these are reduced in times of lower production or even times of necessary shutdown. Be careful not to cut costs you will rely on when your business bounces back.
- If you have a lower cash base it is important to plan your week-to-week cash flow and get your bank onside with your plans. Your bank is inevitably your key to survival and unlocking your bounce-back.
Ensure you utilise the governments effectively and fairly to support cash flow, including the job retention scheme, business grants and the loan scheme.
Furthermore engage with your customers on current trade debts and ensure your credit control function is chasing funds effectively.
Speak to key suppliers, obtain support if need be or request discounts for clearing balances. Request capital and interest holidays from funding organisations on items such as loans, asset finance, leases etc.
Cash will give you time, it’s what you do with that time that will ultimately count.
You Must Adapt
Firstly let’s look at the past few weeks and ask yourself how much have you already adapted your business to fit the current crisis? If you’re anything like us the answer is significantly. You may have gone from a full office environment to remote working, a major change for any business, and in any other environment this probably would have taken a great deal of strategic analysis, trials with small teams and then investment in tech and software. In the crisis environment you probably delivered this inside 24 hours, pretty agile if you ask me! If you’re a product company you may have adapted your product range to suit the changing times or even created new products. Again, tasks that when you have the time would have taken weeks or months to successfully deliver. Again, you probably did this in days!
So as entrepreneurs we’re pretty agile and can adapt our business to suit the changing environment. Take a minute to say well done, you just proved to yourself you can be one of the winners through this crisis. We have to now take that mindset and start to look beyond the uncertainty:
- What will your business look like after the crisis?
- Will your customers’ needs to change?
- Will your product or service offerings need to change or evolve?
- What is happening to your supply chain, will it be the same, will you need new suppliers?
- What resources and capital will be required?
You might not have all the answers to these questions just yet, but my challenge to you is to continue to ask yourself these questions, week after week throughout the crisis. Ensure you challenge yourself to continually to consider how you need to adapt your business to take full advantage of the future once the green light comes back on. If you don’t you might find yourself too far down the grid and have to work really hard on your business in order to stay in the race. This is the time to work on your business!
Understand Your Numbers
How many of you forecast your results in detail and understand a multiple of scenarios? I don’t see many hands. Don’t worry this is typical of most of us, especially in times where our income streams are reasonably stable.
However in times of crisis it’s critical that we have the tools around us to be able to appraise quickly what our opportunities mean for the business in terms of profit and cash.
We have already discussed that your business moving forward will need to be agile and flex accordingly but we also need to know what this means in terms of our numbers. Both profit and cash are important to appraising the opportunities that lie ahead.
With the introduction of cloud accounting some years ago, it is even more straight-forward to appraise different scenarios and understand how resilient your business is. Cloud accounting systems like Xero seamlessly link with a number of reporting apps, one of which is the Sempar Dashboard for Entrepreneurs.
Our Sempar Dashboard:
- Links directly with Xero and pushes actual data to it on a daily basis.
- Uses prior period data to build quick forecasts that you can then change key elements to see how different opportunities play out.
- The forecasts will also tell you the cash requirements of each opportunity.
- It allows us to help you build a number of forecast outcomes and display them visually on a dashboard. The dashboard will then report actual data on a daily basis against the forecasted results.
Our dashboard is a powerful tool for all entrepreneurs to appraise and learn from the past, forecast the future cash, profit and net worth of the business, measuring and evaluating your KPIs on a monthly basis.
Next Steps
To discuss how we can help you see through the uncertainty of this crisis, call us now.