For your business to come out the other side of COVID 19 restrictions and more importantly the recession, it is crucial that you buy yourself as much time or “runway” as possible.
How do you as a business owner extend the time your business has to survive and ultimately “take off” and thrive?
Here are the top four things you can do right now to make it through and prosper from the current challenges:
1. Review the government stimulus options, at federal, state and local levels. Then apply for every one of these options prior to their cut off dates (you would be surprised by how many miss out due to missing deadlines).
2. Review your business expenses and list these into three columns – Essential/not negotiable, grow/add value and commodity/low value.
- For those expenses that fall into the essential/not negotiable category, leave as is – Examples of these may be your minimum viable level of employees, statutory charges (council or water rates) or even motor vehicle expenses (assuming the business needs the vehicles).
- For those expenses that fall into the grow/add value category, consider if you will get further value with a controlled increased spend. These expenses are ones that help your business grow or be more efficient. For example marketing of your business may well be worthwhile if you are getting a return in new or repeat customers from it. As may your professional adviser fees, if they are assisting your business to pivot/adapt or grow from the current challenges (vs lodging your tax returns).
- For expenses that are a commodity or low value, seek to check that you are getting the best deal for your business (check that you are comparing like with like when doing this). For example review mobile phone plans and how many phones you have on the plans (are all of the phones still needed), review your insurance policies (are these still in line with the business needs?), review your energy provider and finally review your subscriptions (do you still need all of them and can some be cancelled or renegotiated?).
3. Put in place a 90 day plan to get your business through the next 90 days and to keep everyone focused during that period of time. 90 day plans often cover a financial projection of the key business metrics (bank balance, loans, sales, gross profitability, overheads and net profit), as well as changes that need to be made in the business during the next three months.
4. Look after your own mental and physical health. Recessions and challenges like we currently face are marathons not sprints, so take care of yourself and think long term. It is crucial that all business owners are giving themselves the best chance of succeeding and this occurs when we are at our best and we present that way at our businesses.
So, how many months of “runway” cash has your business got? Could you wait out a further six to twelve months of reduced trade?
If you either answer no or not sure to either of the above questions, now is the time to invest time and potentially money in working this out.
Trust me in most cases it will help you sleep at night, even if the answer is not the one you were hoping for.