Leading Your Business In Challenging Times

I love working with founders and owners and being a part of their journey to grow their businesses. It's a gratifying experience, but it can also be challenging, especially in recent times.?

In the past year, we have seen it all - crisis, pivots, losses, and sometimes even plain chaos. It's been a year of change and upheaval.?

But as it always happens when faced with challenges, we have witnessed far more innovation, flexibility, and adaptability in the business world.?

Today, we start to see the light at the end of the tunnel. There is hope for better and the best in 2023 - and we need a plan to stand out and thrive in the continuing economic crisis.?

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>> There is a lot that can go right or wrong with running a business, but it's not all about where your business can be in the future but also about where you want it to be. <<

?Are you looking for:?

• Improvement in your business's performance
• Cash flow stability
• "Financial peace of mind" and sense of security - knowing that your business operates smoothly and you have a clear path forward?

??I've put together 11 action steps that you can start implementing in your business to help you achieve just that and succeed in the coming months and beyond.?

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1. Start with a forecast.?

?This might come across as a boring and uninteresting task to add to your to-do list, but the fact remains that forecasting your business and finances is a decisive factor in your success.?

?For any high-growth business, look into the following types of financial forecasting:?

?12-months Profit and Loss Rolling Forecast?

?A 12-month rolling forecast means to predict your business's performance and financials for a continuous period of 12 months. As each month passes by, a new month is added - which means that you will always have a live forecast for 12 months.?

The benefit here is that you can always stay on top of the ever-changing circumstances and factor in the sudden changes as and when they happen.?

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Cash Flow Forecast

The frequency to track this depends on where you stand in terms of your cash flow. Understand what works best for you and your business and analyse your cash flow on a weekly or monthly basis.?

?3-way financial projections

A three-way forecast is incredibly helpful for businesses that are constantly growing. It includes a profit and loss income statement, balance sheet, and cash flow forecast.?

It helps to know how your business would look under certain conditions and analyse scenarios. A tool like this will give you the ability to make better decisions and impact your company's future.?

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2. Prioritise relationships with your clients.?

The last 12 months have shown us that it's crucial to focus on relationships.?

Your clients should know you're available for them, so find ways to communicate with them regularly.?

Additionally, have you thought about producing a plan for your key clients? What challenges are they having now (or might have as we start emerging from the crisis)??

?Are there any additional problems appearing that you can solve for them??

Can you provide additional solutions, and at the same time, generate additional revenue for your company??

?And finally, ask your clients for feedback. What additional support do they need? Would they like you to adjust how you're going to work together and communicate in the future?

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?3. Focus on the right profitability drivers in your business. ?

?Identify the key aspects affecting your bottom line and decide which profitability drivers you want to focus on.?

?HINT: This tip is not necessarily about improving your profitability straight away but instead is about understanding where you might be losing money.

?More often than not, when the business is booming, companies tend to focus a lot less on identifying and tackling the under-performing areas because increasing profits end up:??

• ?hiding the loss-making services or
• hiding certain customers and projects that might be costing you too much.?

?Does this sound familiar??

If you offer multiple services or products in your business, it's very likely some of them won't produce enough profit.?

?TIP: ?Treat every service you offer (and every product your company sells) as if it were a separate business. Does each one contribute to the profitability of your company? If you understand this, you'll be able to double down on what's working in your business.?

The bottom line is that you must know if your services cost you more money than they're generating. Keep only the offers and clients that generate profit.?

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?4. Change your approach to spending and managing your expenses.?

It's very easy to overspend in your business, particularly when things are going well. I know that last year was tough - and the great majority of business owners had to focus on cutting down costs and finding as many savings as possible.?

However, when you focus on costs, you might be holding your business back from growth.

Your accountant might be asking you to find more and more ways to cut costs but as we're getting out of the pandemic - consider changing your approach to a more entrepreneurial one.?

It's how your business will grow and also how you can improve profitability!?

There are 2 main ways of how you can look at your business expenditure:?

• What's the ROI? - view your costs as an investment and consider the return you will gain from that expenditure.?
• What's the time-saving? - the return on your investment doesn't have to be financial. It can be in the form of time-saving.?

?What's the value of your time? Can you pay someone to do a job for you at a lower rate than the value of your own time? So that you can dedicate more time to activities that will actually help your business grow.?

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5. Improve the procedures and processes in your business?

?Are your finances chaotic and unorganised? Are there any processes that need reviewing in your business that you know could lead to saving you time and money in the long-term?

?If you envision better efficiency in your business, you need to get your processes and systems in place.?

?For example: Wondering what else you can do to optimise your cash flow? You could work on your debtors' management procedures for starters and revamp your spending procedure in this current climate.

Systems and procedures might seem like something that warrants a ton of time and effort, but once they're in place, they help you run your business like the well-oiled machine it was always meant to be.?

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6. Implement new tools to save time+money in your business

There are so many apps, software and tools available to help founders like you run your business better and more efficiently. I'm not just talking about financial tools but also operational, project management or CRM.?

?Here are a few you could get started with:?

• Make your receipts processing so much easier with ReceiptBank or HubDoc?
• Take control of your cash flow in the short-term with Float?
• Get your debt chasing under control - with Chaser
• Build long-term projections - with Futrli?
• Arrange for your clients to pay you via DD - with GoCardless?
• Sort out your approval process with Approval Max.?

?At the very least, switch to cloud-based accounting software, to begin with, even if everything else seems too daunting.??

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?7. Can you identify an activity that will help you get your business back on track?

There is always a way to recover your business when you tap into your finances.?

Think about some action steps you can implement immediately to start getting new clients and growing your business again.

?ACTION TIP: Identify an activity (for example, a new marketing strategy) that will help you grow your business back and forecast how much you will need to spend on that activity. Then establish the expectation of the ROI.?

?Don't forget to include it in your forecast to determine the impact of these activities on your business, how it could potentially affect the bottom line.?

?See whether you can or cannot afford it, and in case you believe you can't - dig deeper to find out if there is any way for you to invest in the steps to grow your business again.?

8. Have a business plan, a vision, and a backup plan to be ready for the unexpected.?

All the best things start with a plan! You must be able to look further ahead - beyond the crisis.?

An action plan, vision, and mission for the next few years are a must-have for any business owner.?

It is about where you want to be when this is over and 3 - 5 years into the future.?

"Begin with the end in mind",, Stephen Covey.?

And forecasting is a big part of planning - as this is how you quantify and track your plans (see Step 1).?

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?9. Culture before strategy and profit - look after your team and involve them in your plans.?

?The pandemic had an enormous impact on our mental health.

?I'm sure you made taking care of your team during this challenging time a priority. We must take care of the well-being of the people who take care of our clients.?

?Some people need more time to accept and deal with change than others. Your team needs support from the person at the top, and encouragement that things will be well.?

?There are a few ideas on how you can support your team in these tricky times:

• Ensure your employees are taking time off
• Train your managers to ensure they're looking after their teams
• Offer your staff mental health benefits
• Allow flexible ways of working - get your team focused on the output, not on the number of hours they're spending at work
• Get your team involved and ask for their input into what your business needs to get in better shape by the end of the year.?

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10. Create an emergency fund.

I wouldn't be an FD if I didn't mention financial security!

Don't underestimate the benefits of having an emergency fund. I know it's hard to keep cash in the bank as a business owner (and these days close to impossible!).?

?TIP: Consider this a rule of thumb and have a plan to put away at least three months' worth of operational expenses aside.?

?If you ever need to resolve an unfortunate situation, you now know that you have an emergency fund to tap into.?

?If you don't have much cash at hand at the moment, you can change it! There are ways to bolster your cash reserves (see our guide below).

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?11. Implement these key pillars of financial management.

When it comes to financial management, it is not just about staying compliant - i.e. ensuring your annual accounts and VAT returns are submitted or that your bank statement is reconciled.

These are necessary, and you certainly have to make sure that your business is compliant, but there is so much more to that.?

?These are the pillars of financial management you should be factoring into your business and financials:?

• ?Reporting
• Strategy
• Forecasting
• Budgeting?
• Cashflow?

If you're planning to scale your business and strengthen your cash flow - these are non-negotiable.?

They are required if you want to achieve your financial milestones, improve profitability, work out trends of how you've been doing over the years, and anticipate any issues before they even appear.?

?And most importantly - to help you plan and prepare for the future, thus substantially increasing the chance of your success.?

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Can this year be a breakthrough year for your business? What would need to happen for this to be true? What's your plan for getting ahead and leading your business out of these challenging times??

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I'm curious to hear about the approach you're going to take!?

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What tactics and strategies do you use to stay on top of your finances?