What's the Plan B for your Business Ask yourself these questions during this unprecedented times

As Entrepreneurs, we are living and working in uncertain times. Countries are on lock down, there is negative media, major travel restrictions, and the perception of social and economic turmoil. With the spread of the Corona Virus each day, there comes fear and panic spreading amongst consumers and businesses alike.

As Entrepreneurs, many of us are already seeing the effects on daily revenues and cash flow and many more of us can see that the current business models and ways of working need to change.These are unprecedented times, and calls for extraordinary planning and restructuring. To every business owner the following questions are critical

1. What happens to my business?
2. What’s my Burn Rate and Runway?
3. What does my new business model look like?
4. Is this a short term, medium term or long term problem?

Its necessary you take stock of your current gross burn rate i.e. how much cash are you spending each month. How much are fixed expenses (those you can’t change, i.e. rent?) And how much are variable expenses (salaries)

 Next, take a look at your actual revenue each month – not forecast, but real revenue coming in each month. For most business this number may be almost zero.During this season, the expenses exceed the revenue and represents the amount of money your company will loses (“burns”) each month. 

Now take a look at your bank account and See how many months your company can survive burning that amount of cash each month. This is your runway – the amount of time your company has before it runs out of money.

 Unfortunately, it’s no longer a business as usual and there is need to make difficult decisions to reduce your cash burn rate quickly and start re configuring your business.

1. Reassess your business model    

Business will be forced to revised their operating plans more conservative. Noting that both consumers and businesses have become more reticent to spend, Companies selling physical products will see their supply chains disrupted, business relying heavily on in-person sales efforts will also take a hit, given travel restrictions and the likely adoption of remote work among their customers.

It goes without saying that companies must explore if some part of their business model can be oriented around the new rules of social isolation. Can your product be sold, delivered or produced online? These companies must master the art of digital selling.Spend as much time discussing the new strategy, adapt, evolve and grow through disruption

2. Embrace lean and agile business survival strategies

Business owners need to embrace lean and agile business survival strategies. Depending on your cash situation, you may have to consider layoffs. If you have to take that route consider cutting the salaries of the higher paid exec/employees to try to keep the people on lower salary bandwidth.

Cut on other discretionary costs that encourage only incremental growth. A lot of marketing and sales campaigns would fall here. I would urge business owners to Plan, Communicate and Act With Compassion

3. Systemic Ecosystem empathy

Remarkable things can happen when ecosystem stakeholders come together to empathy in problem-solving during difficult times.

Should worse come to shove systemic empathy will have to be built into the ecosystem where you negotiate with stakeholders been the banks, suppliers, clients as you restructure your operations and help remain afloat. Be proactive as soon as possible to save yourself from many unnecessary sleepless nights.

4. Over communicate. Showcase understanding and empathy

Your employees are afraid, So are your customers, partners and vendors. There is need therefore as a business owner to, be visibly and emotionally present. Communicate and then communicate some more.

We have to be, think and do things differently!

Ichungwa Ann is a Strategy and Finance Consultant at Wylde International. She can be found on [email protected]