So much is happening so quickly at the moment but, in reality, we just need to approach Corona Virus like any other business challenge.
Clarify the current situation
Consider everything which is known about the business, the industry, and the impact of Corona Virus at this time. List what resources are available within the business and elsewhere. Maintain and up to date cashflow to see how long current resources will last. Whilst a lot of information is not yet known, it is important to assess what is.
It is possible to create a basic cashflow forecast on a spreadsheet showing all major cash income and outgoings over the next 3 months. This may be similar to previous months' bank transactions or may need to be adjusted for such things as:
- Bad debts - people unable to pay at all
- Slow payers - people who will pay but later than usual
- Non-essential costs - cut any costs that aren't needed for now
- Staff costs - normal wages, one-off redundancy costs, furloughed staff wages which will be reclaimed much later
- Non-essential capital items and slow moving stock - these can be sold off quickly to generate extra cash now
- Government grants and loans
- Your share - only take out the minimum required to live on for a few months.
At which point will the business run out of cash?
If it will survive 3 months then try a longer period to provide confidence?
Can the business continue as normal or will there need to be changes in some (or all) of the products, services and staffing? Cashflow and in depth knowledge of the industry will give an idea of whether the business is likely to trade almost as normal or whether it will need to pivot the nature of the business or even to mothball it and minimise all costs for the time being.
It may be appropriate to take out a loan to manage through the crisis but remember that this will need to be repaid afterwards. Some businesses will return to normal fairly quickly, others may take longer to ramp back up if they are seen as less essential. Others will not just return to normal but may catch up all their missing trade too. Many restaurants will be the scene of reunion parties and weddings will be reorganised. If the business is unlikely to have the funds to repay a loan later then it may be wiser to avoid taking one out.
People are more than resources
Your team may continue working on full or reduced hours or may be furloughed. Whatever their situation they should be treated fairly, honestly, and kindly. They will be the ones helping to maintain the business during difficult times or rebuilding it later.
Cashflow forecasts and business planning are some of the services we provide and we would be happy to provide additional help with this.