RECAP
In part 1 of the business tactical response plan, it was all about taking back control of your business.
This is achieved by eliminating the fear of the unknown through cash flow planning and looking at different possible scenarios for your business moving forward.
Getting visibility around your numbers and possible future outcomes (as bad as it may seem) allows you to plan and execute, so as to give your business the best possible chance to move through the storm and position the business for better days ahead.
If you have not read part 1 that I published last week, I would strongly recommend you do so. It has received great reactions and is helping many business owners right now.
PART 2
Once you have forecasted the future with different potential outcomes, there will be many ways to move forward from here. It will depend on your business size, industry, your cash war chest and, probably most of all, your ability to change your thinking and your actions from when times were generally good. Many business owners will be completely outside their comfort zone and that is a good thing.
TALK TO YOUR CUSTOMERS THAT OWE YOU MONEY
If you are owed money for some time and your cash collection system is not working, you need a different strategy. The longer it goes on, the less chance you have of receiving the money. People can react to adversities and challenges in different ways. Sadly, one way is turning off the phone and putting their head in the sand. You will need to reframe the conversation – so get on the front foot and reassure your customers you want to work WITH them at this time.
This could be an agreed payment plan that works for both of you, or a discount on the amount owing. Always have a cash in the door mindset.
In these uncertain times, I could be forgiven for saying something is better than nothing. And it might just be enough to get you through the month.
TALK TO YOUR BEST CUSTOMERS
Everyone has their own concerns and reasons why they have stopped buying from you. I would recommend that you stay connected to your customers. Don’t assume you know – try to understand where they are coming from and see if there are ways you can lower the barriers between you both, so as to get people buying from you again.
This could be a complete change on how you deliver your product/service, or it could be as simple as educating your customer base about the precautions you are taking to ensure everyone’s safety.
MANAGE EXPENSES
Start cutting unnecessary expenses – be ruthless. As an example – you are probably paying monthly subscriptions and you will begin to wonder why you got them in the first place, and what value it’s bringing to your business right now.
Also, I see time and time again, when business owners are in a growth mindset and things are going well, respectfully, they sometimes get lazy and lavish in their spending.
Let’s get lean again!
OPEN UP A DIALOGUE WITH YOUR KEY SUPPLIERS
Can you extend payment terms with your suppliers? Can you barter the price of your goods? Get on the phone. If you don’t ask, you will definitely not receive.
TALK TO THE TAX OFFICE
The ATO is being very supportive right now and there are many options to defer tax payments or set up low interest payment plans.
SWITCH UTILITY SUPPLIERS
You may have been putting this off for a while as it was in the “too hard” basket. Now you may find that you have more time on your hands or a team member may have some free time.
Get on the phone and hustle.
TALK TO YOUR MORTGAGE BROKER
There is also a lot of support coming from the banks during these times. Discuss the potential of a payment holiday or potentially accessing short term finance to get you through it.
Consider taking advantage of the loan guarantee scheme the Australian Government is providing to businesses, to allow them easier access to bank funds. Speak to your mortgage broker today. You might be surprised with the result. If you don’t know one, ask me. I know some great mortgage brokers.
WATCH CASH FLOW FUNDAMENTALS
Your customers should be paying you faster than you are paying your suppliers – or else you may eventually run out of money. Your accountant should be able to give you some visibility around this.
USE THE GOVERNMENT STIMULUS TO MAXIMUM ADVANTAGE
This is crucial. The good news is the government has come to the party and is giving some very generous support to business owners in various different stimulus packages. The not so good news is that it can be very confusing with all the information out there, and you might sometimes feel like you are drinking water from a fire hydrant!
Your accountant should be up to speed and will be able to advise you on how the stimulus will apply to your specific circumstances. Once you have this information, the amounts should be plugged into your future cash flows, which should make your cash position look a lot better.
PIVOT YOUR SERVICE/PRODUCT OFFERING
I have spoken about this in previous articles but most certainly you will need to make a major shift in how you deliver your service or product.
Get your star team into groups for 60 minutes and brainstorm new creative ways of how you do business in these uncertain times. Try to get a positive buzz going and offer rewards for the best new idea, etc.
You could even get your customers involved. No one knows your products/services better than your customer. A small change in a different direction could make a massive impact over time.
SALES AND MARKETING
Online marketing is where it’s at. This could be the virtual campfire where each business tells their own story in creative and unique ways. As people self-isolate, they are spending a lot more time on social media. You need to be right there connecting with them.
Your customer’s thinking today is a lot different to what it was a couple of months ago and you need to speak to that. I believe that this is not a time to reduce marketing effort – this is what your competitors are probably doing. Maybe go the other direction. However, I would recommend that you look at ways to become more resourceful and get more leverage with your marketing dollar.
YOUR NEW AND IMPROVED CASH FLOW SCENARIO
You will be amazed at the positive changes to your cash flow scenario, once you start implementing some of these strategies.
This will give your confidence a massive boost, which will enable you to move forward with positivity knowing that you will ABSOLUTELY get through it. And once we pass the storm, your business will be lean, resourceful and positioned for great success as the economy rebounds.
The above are only some of the things you should be thinking about right now and getting help from your accountant with. I hope this has given you some valuable insights into what you can do to navigate these unprecedented times together.
Please tag a business owner that needs to see this.
Thanks,
John
0449 083 740
john@businessaccountantsperth.com.au