The unfortunate reality of COVID-19 is that many small to medium size enterprises may not make it through the end of the year. It’s a depressing thought but it is a harsh reality.
However, there are some steps that you can take in order to increase your chances of weathering the storm during this unprecedented financial time in our history.
Before you do anything else, you must sit down and review your cash flow. Look at what you have coming in and going out on a monthly or weekly basis. Review your forecasts, taking into account any purchasing behavioural changes that have occurred during the shutdown.
Dig into the details. Know every facet of your cash flow expenses, from your rent, utilities, wages, taxes, vendor payments, insurance. Any expense that is paid on a monthly basis. Include in your detail when they are also due to be paid. This will give you a clear picture on the overall health and longevity of your company.
Does your cash flow analysis put you at ease that you are okay for now, or does it throw you into a panic thinking, how are we going to make it?
With so much uncertainty right now, the only thing we do know is that the changes aren’t over. Keeping a keen eye on your company’s cash flow will dictate other decisions that will need to be made in order to help your company survive.
Protecting your overall business is critical, especially during these crazy times. Every company needs to be properly insured to protect all the hard work that went into creating and growing your business. Comprehensive business insurance should be established to focus on each aspect of your company, to move it forward and make it successful.
This type of coverage provides a safeguard for unexpected events. Additionally, a full comprehensive protection plan can provide Business Interruption cover and loss of income. Should you need to temporarily close your doors due to an event covered by your policy, this cover will ensure you still have a business when it is over.
BizCover has access to a network of insurance companies and can quickly provide you free, multiple quotes so you can compare policies without the need to ring around or visit multiple websites. Within minutes you will have options to choose from and can obtain coverage immediately.
Obtaining several quotes from different insurance companies will allow you to see not only the different coverage levels but also the cost of each policy. BizCover can make this process easier and faster. For more information regarding the benefits of comprehensive business coverage, please go to https://www.bizcover.co.nz/business-insurance/.
Review Your Company’s Cancellation Clauses / Terms and Conditions
Spend the time to review your company’s terms & conditions and the cancellation clauses. This is an area that can go overlooked for years yet could make the difference between your company making it through a crisis and tanking your company.
With many customers reviewing their own finances, they may want to cancel any product or service that they deem non-essential for the present time. If your terms and conditions do not properly cover the current contract obligations, you could be out the majority of your cash flow, thus damaging your business. This must be a key part of your business survival plan.
Reach Out to Your Suppliers, Vendors, and Other Relevant Business Relationships
Talk with your suppliers and vendors about your current business situation. Be honest with them. They will want you to survive this financial storm, as it is mutually beneficial for you both. They too are a business and they need you as a customer as much as you need them as a supplier.
Discuss your financial situation and plans with your landlord, your bank and any other business contact you may owe money to. Being up front and honest about your situation and plans may provide some allowances for additional time or resources to help support your business during these uncertain times.
Speaking with the tax office is not something any business looks forward to but add this to your list of phone calls to make to discuss your tax obligations. Inquire about any assistance that may be available and see if they have any advice on how to best handle your obligations during COVID-19.
Call the office and request a payment plan. This is not an unexpected type of call for them right now. Find out what options are available to you and decide which course of action is in your best interest.
Whenever possible, make every effort to get caught up and back on track just as soon as you can. Missing these payments can cause serious headaches for you and your business down the road.
Be Your Own Business Hero
The one with the most invested in your business is you, not only your monetary investment, but also the time, effort, and energy you have put into getting your business up and running. You need to be your own hero and not expect the government, or any other entity, to come save you and your business.
Although there may be government help available, do not depend on it. If it becomes available, great. If it doesn’t, you will still be in the driver’s seat regarding the direction of your company. It is going to come down to you and your actions.
Review New Pricing and Payment Options
With so many uncertainties, any steps you can take to secure incoming cash flow the better. Review ways in which you can get paid for your products or services up front. Offer incentives to paying up front instead of after the transaction is complete. Another option could be receiving payments throughout the project as portions of the job are completed. This will keep money flowing into the company as the work is being completed instead of waiting until the very end of the project.
Take a close look at the current terms of payment versus what would increase your incoming cash flow on a more regular pace. The companies will still need to utilise their purchasing budgets by the end of the financial year, regardless of the pandemic.
Other Ways to Use Your Talents
What other ways can you bring in revenue for your company until things even out? Is there another way to use your team’s talents? What skill sets do you have to offer alternative products or services?
Take an inventory of your core strengths and talents then investigate if there is a demand for that. If so, offer these new or temporary products or services to your customers.
Above and Beyond Customer Service
The one thing that will set your company apart from other companies is above and beyond customer service. This is true at any time but it is true especially now. By offering your customers a little something extra and showing your appreciation for their continued support, you could solidify the relationship for life.
This is one of the most difficult areas to address. It is not pleasant for anyone to think about having to let anyone from their staff go but the reality is that in some cases it may not be viable to keep all employees moving forward.
With potential limited income for the short or long term, it may be necessary to let some of the staff go. Take a look at your cash flow and determine if this is a course of action that you need to take in order to keep your company viable.
If you find this is an action you need to take, there are a couple of different ways to approach it. First, you can review which positions may no longer be needed or if there are any members of your staff that are underperforming. Second, you could approach your staff about reducing their hours or days working per week in order to reduce the payroll expenses. This could allow for more people to stay employed until things pick back up.
Although we are navigating challenging times during COVID-19, enlisting some of these business survival tips can help you increase the chances of your company surviving and thriving in the long run.