It’s time to think like a start-up and act like a grown up – you need to be on top of your game to trade through the COVID-19 crisis
Remember when the business first started? Those key questions of “What were you going to sell?”, “Who were you going to sell to?”, “Why should they buy from you?”, “How much will I charge?”, “Why will they buy from me”, “What does the market want / need?”. Well, in these uncertain and challenging times it’s time to think like a start up again. For some this will be daunting, for others exciting but there’s no doubt that a focus on how you really add value to your customers with what you offer is needed now more than ever. New industries are being created, markets evolving, relationships with customers and suppliers are either strengthening or coming under pressure, which side do you want to be on?
With this opportunity comes responsibility. Every business owner should now be equipping themselves with the skillset and toolkit to know their business better than ever, and the levers they can push and pull to achieve the right cash and profit outcomes. Those that do will come out of these uncertain times in a much better position. Some may well look back and say it’s the best thing that ever happened to them as it gave them the opportunity to reinvent themselves. Don’t waste this opportunity.
With so much uncertainty around comes the need to adapt quickly and make good decisions, and so never has it been more important to have regular, up to date and accurate information at your fingertips. The difference between profitability (essential for the long term sustainability of your business) and cash (essential for fuelling your business) has, and will, potentially never have been greater. With loans being applied for, VAT/PAYE deferrals allowed and other short term measures in place, cash may look strong now but future outflows need to be anticipated and planned for so there are no surprises down the line when the liabilities become due. This also applies to how dividends are paid out – are the reserves still there (or will be there) to continue dividend payments which might mean remuneration structures need to be looked at?
If you’ve never had a budget in place – now is the time. Tracking actuals against budget will highlight early where things may be slipping and allow you to take action. Cash flow forecasts (both short and long term) should now have become part of your regular finance process and you need to imagine multiple scenarios so you can equip yourself with all the information you need to react to the variables. Cloud based tools like Xero for your accounting, make it so easy to have up to the minute, accurate information and with a huge number of apps that can ‘plug-in’ you have no excuse not to prepare and put yourself ahead of your competition.
You also need to revisit your business plan. The long term goal and vision may well be similar, but how you get there may have changed for ever. Have a look at the 7 pillars of your business, they’re all equally important. Take a look at strategy & leadership, sales, marketing, operations, people, technology and legal & financial in your plan and be sure of how you can still keep all bases covered, even if it means spinning multiple plates. Remember that you’re in start-up mode now.
A lot of businesses have had the initial shock of COVID-19 and taken the action they need to ensure short term survival. This has been helped massively by the government support in place so re-starting your business as the lockdown gets lifted will likely be much harder to manage. Balancing the need to re-open against the resources that requires will not be easy and timing will be crucial. A business operating at 50% of previous levels will need to ensure it’s still able to be profitable – that might mean some tough decisions. You will also need to coordinate this with the gradual phasing out of the furlough scheme. Are you creating enough flexibility for the business to ramp up quickly once the recovery period kicks in?
Beware also that as you trade through this, often the most dangerous time for a businesses is coming out of recession. Growth inevitably eats cash and so the funding of your business to allow that growth will be vitally important – especially if balance sheet and cash reserves have been hit by the downturn. Quality information will help you to walk the line between shoring up the balance sheet and investing for growth.
So, however you approach the coming weeks and months in your business, be prepared for the different outcomes and remember that the huge difference between when you started up and now is that you’re wiser, have a better network and a bigger team of people all willing you to succeed, so whilst it’ll be a roller coaster ride, the message is clear – don’t waste this opportunity.
We’re not just here for crises, we’ve always been here for you, so if you want to chat anything through in relation to your business, visit our main website and get in touch.