SURVIVING THE NEXT SIX MONTHS

In Australia, we are now officially under lock-down. In some States, this will be for three months. We aren’t the only ones. Globally, we have joined a long list of countries.

If you have a small business or if you’re a start-up – how will you survive the next six months?

To survive, your mantra should be about preserving your cashflow. Think – “Show Me The Money!”  Focus all your worry and attention on your cash situation - that will be the key to your survival.

Here’s a few suggestions on how:

1.    Projecting

Things will be especially bad for the next three months, if not the next six months. Most small to medium sized businesses will lose between 30% to 50% of their revenue during this time. And if you’re a start-up – well, that could be more like 95%!

The first thing you should be doing is to look at your business and prepare some modelling for this time. Scenario planning should be staged to take into account several cost-base restructures to see what cash-flow survival looks like. 

Then you need to be strong and put them into action as each scenario plays out.

2.    Planning Out

With the mantra of maintaining your cashflow, there are a few things that you should already be planning to do:

• Look at any current project or operational spends and see if they can be pared back or mothballed. 
• Target your finance team towards chasing all outstanding payments from your customers.
• Shorten your payment terms and your frequency of invoicing.
• Look at your existing supplier costs and see which ones you can defer payments on. This will often depend on the supplier, the goods/services being supplied, your bargaining power and the cumbersome nature of their process to get you to pay up.
• Look at how you can take advantage of the various Government bailouts, schemes and positionings. This will help you with things like decisions about your employees, your tax position and even any rental payments.
• Speak to your various financial institutions to see how they can help relieve or defer any debt obligations.

Of course, some of the above will require you to dust out the contracts you have signed. Strictly speaking, yes – you should do an audit of them to determine what is able to be done. Have a look at this Webinar (Commercial Contracts and Coronavirus) for some further information. But they key take away is to talk – try to negotiate in good faith to a position that will benefit both sides.

3.    Prioritising

Your customers are most likely in the same scary hell you are. And given the current situation, they will not be in any position to shop around for another for another supplier or provider.  Don’t take advantage of this. 

Be loyal to your customers. Keep them in the loop about what is happening, especially where there may be delays. Try to be agile and to be supportive of the position they are in as well. Why? Because everything will get back to normal sooner rather than later. And they will remember how you treated them!

My only caveat is this – your resources, time and attention are scarcer then they have ever been, so you need to prioritise those customers who can pay! Remember the mantra….

4.    People

Your staff are the lifeblood of your business. Make sure you keep them informed. This will feel like you are overcommunicating, but in this time of uncertainty they will really appreciate it! Be clear, be honest and most of all, be fair. Including when you have to present the various options to them – leave without pay, temporary pay cuts, shift to part-time etc. Help them understand the working of the various options (including the impact of any Government assistance) so that they make the best decision about their employment.

Keeping your employees in the loop is both the human thing to do, but also when this ends, you will need them to help you navigate what will undoubtedly be a whole new world! They will remember your empathy and will repay you with the loyalty you have shown them.

I have been told a few great stories from relieved businesses who have taken this strategy to their employees. Each of their employees have been very supportive and of receptive of the necessary actions needed to keep the business solvent.

5.    Positioning

I know it will be difficult while we are all working furiously to keep our heads above water, but make sure that some of your day is devoted to planning for the future.  For example, we have all had to learn very quickly about working remotely. This could be an opportunity for your business to develop products and services for this market. Remote working has also proven to many people that much can be done without the need to physically be in the office. The opportunity here is to be open to a pool of potential job candidates that you previously were closed to you (Working From Everest Basecamp - The Possibilities!). 

Use these six months wisely and spend some time positioning yourself so that you are in the best position to recover and capitalise on the new landscape that will be in front of all of us, post-coronavirus.