Do You Have A Business Continuity Plan?

Last week I had a ZOOM call with several of my clients discussing their business readiness and continuity plan. I shared with them the top 8 tips to stay in business during COVID-19

During any crisis period, every business, regardless of their industry, should have a continuity plan in place.

It's all about the plan. You need to create a plan, share the plan with the key shareholders in your organization, and monitor your plan. Most importantly build accountability by working with a coach or third party consultant.

The goal of every plan is to ensure that your business continues.

Follow these steps to better understand the financial position of your business.

1. Understand Your Fixed Costs

Salaries, rent, marketing, insurance, etc. are fixed costs. Do you know how much money your business needs to operate each month? Ideally, you should have...

2. Three Months Of Reserve

Do you have a minimum of 3 months of cash to cover your fixed costs if you had no work or receivables for 3 months?

3. Assess Receivables

Do you have any large invoices that might be at risk?  Any work in progress that you are slow at invoicing?

4. Project Revenues

Based on your work in progress and account receivables, what's your realistic revenue projection for the next 2 quarters? Do you have enough cash on hand and projected revenues to stay in business for at least 6 months?

 REALITY CHECK

If you don't have 3 months of cash reserves (assuming no income) and a minimum of projected revenues then you need to take action NOW!

Here are some recommendations.

UNDERSTAND YOUR BIG EXPENSES

Your big expenses are the ones burning cash

? Salaries

? Rent

? Suppliers

? Debt / Loan Payments

CASH IS KING

When I was the CFO of a company in financial trouble here are some steps that I took to conserve cash and bring more in.

1. We laid off non-essential staff or reduced hours to save cash. This is always tough, but essential.
2. We negotiated better terms and payments with all of our suppliers. We established a pecking order, paying the most important suppliers first.
3. We restructured some of our debt with private lenders, particularly investors that lent us capital. With our banks we asked for increases to our lines of credit. Keep in mind, key interest rates are lower now so it is much cheaper to borrow.
4. We focused on collecting receivables and even worked with a factoring company for some of our larger receivables.
5. We budgeted money for more marketing to get more leads and customers. This was a longer term play because we knew that this would take time.
6. We pivoted the business to focus on our most profitable services and built this into our marketing plan.

In addition to the above steps, you should also see if you can tap into the many financial resources that have become available to business owners. Start your research by listening to this webinar - Navigating Canadian Government’s Employer Assistance Programs and be sure to check out all the webinars offered by TEC Canada. Note, if you are based in the United States, visit Vistage and check out the article - CARES Act and SBA loans: How businesses can leverage loan relief

Once you stabilize your business, the next and most important step is to get back to business.

Provided you budgeted for marketing, now is the time to double down and focus on building your business with new and existing customers.

Consumers and business owners have become acutely aware of COVID-19 and the impact it is having on their lives. One of the best ways to reach new customers is through Facebook primarily because self-isolation is spiking use. To capitalize on this trend, here are three recommendations.

1. Set aside a marketing budget to advertise on Facebook and drive consumers to your website.

2. Educate consumers that visit your website on your products or services. The easiest way to do this is with call to action copy blog articles that not only educate but have calls to action encouraging readers to contact you for more information. 

3. Finally, make sure your business has personnel in place to handle requests for services.

If you need help navigating this crisis, please do not hesitate to reach out. I am dialed in to a network of experts, business coaches and consultants throughout the world because of my business coach training through Vistage Worldwide and The Executive Committee (TEC) and will happily share my knowledge. Times like this we need to work together.