During the past week or so I have conducted over 20 mentoring sessions (remotely of course!) with Business owners from a range of Industries. Some of them have seen their businesses completely decimated from the affects of this insidious pandemic while others have yet to feel a significant impact. What they all had in common though was a feeling of uncertainty around what will happen next. And, of course, the problem is no-one really knows.
At a time like we are experiencing right now, it is natural to feel overwhelmed. One way I’ve always dealt with that feeling is to make a list and tackle one thing at a time. So with that in mind, I thought I would provide a summary (in “list” form, of course) of some of the key practical actions you can focus on, one at a time, to help you through this period and prepare for the recovery, whenever that may be.
If you’d like further information around any of these, or you simply prefer listening to reading lengthy blog posts, I’ve also released a podcast episode that deals with the same topic. https://shouldiownabusiness.com/action-list-for-surviving-a-downturn/
Action List for surviving a downturn
1 Complete a Cash Flow Forecast
Review your budget immediately, starting with a detailed Cash Flow forecast for the next 6-12 months. Do three versions.
a) what you expect to happen,
b) one that is a little better than you expect to happen,
c) one that is a worst-case scenario.
In preparing your forecast, speak with your customers to get a feel for their plans and expected purchases.
2 Reach out to your suppliers and other creditors
If you are a part of a supply chain, talk to your suppliers straight away. Agree on a plan with them and see if you can extend the payment terms for outstanding and future invoices. Your cash flow forecast will help you work out what you can afford to pay and when. Review any supply agreements or terms and conditions that exist with your suppliers.
There may be force majeure clauses you can invoke if you cannot mutually agree to terms. Ask your Lawyer to review any contracts you may have to ensure you have a thorough understanding of your contractual obligations.
Also speak with your utility providers and any one else you need to pay regularly.
3 Speak with your Landlord
Talk to your landlord straight away. Agree on a plan with them and see if you can reduce your rent. Your cash flow forecast will help you work out what you can afford to pay and when. Perhaps you can agree to reduce your rent payments now, in return for higher payments later in the year. Again, your Lawyer will help you to understand the applicable provisions within your lease.
4 Organise a Tax payment plan
Call the ATO if you need to enter into a payment plan to spread your existing tax liabilities to aid your cash flow. Your Accountant will be able to assist with this.
5 Approach your Bank or other lenders
Approach your lenders early.
With a good cash flow forecast and a clear plan, your lender will have more confidence to help you. Some Banks have already announced measures such as repayment deferrals on some types of loans.
6 Speak with your Staff and contractors
Consult with your staff and contractors to find out their views or how they can help. This is a high-stress time for all concerned so always show respect and empathy. You may have to stand down some or all of your Staff but make sure you get professional advice so you remain compliant with the law. Remember though, that if the downturn passes quickly, you will need them back again. Do what you can to keep your staff.
7 Review your insurance policies
If you have a business interruption policy contact your insurer or broker as soon as possible as you may be able to make a claim.
8 Try not to withdraw from the market
Cutting marketing or new product development spending often happens in a downturn. Be careful that you don’t waste what you have already invested in brand marketing or product development by withdrawing from the market.
Here is a link to a 2009 HBR article How To Market In A Downturn about what has worked in several previous recessions including during the GFC.
Companies that focus on their customers, take a scalpel rather than a cleaver to the marketing budget, and adjust strategies, and product offerings in response to shifting demand are more likely to flourish both during and after a recession.
9 Find new ways
Time to put the thinking cap on. Get creative and do things you have not tried before.
10 Look after yourself and ask for help
There are plenty of places to turn to for help during this period. Don’t feel like you need to go it alone. Speak with family, friends, colleagues, mentors or external professionals.
11 Keep a lookout for any new government stimulus package.
Research the measures that are currently available and keep your eyes and ears open – I’ve got a feeling there will be more to come.
Stay safe everyone – Together we can get through this.