Despite our best efforts to avoid a crisis at all costs, we are bound to encounter it at some point in our business life. Sometimes more than once. How we manage and respond to a crisis will determine our comeback, or worse, it can have catastrophic effects.
The COVID-19 pandemic forced many businesses to be the square in a round hole.
It forced businesses to be imaginative, flexible, and resilient.
Remember, every crisis can also be an opportunity.
In this article, we will share six tips and advice on navigating your business through uncertain times.
Scenario Analysis, Planning & Forecasting
When we hit a crisis, we are under pressure to adjust the way we do things, and our natural tendency is to become overly conservative and make rash decisions, which could harm your business’s ability to deliver value in the long-term.
It is more important than ever that we do forecasts to assist with guidance and accountability. If your business has never gone through a crisis or a recession, traditional inputs will not support expected outcomes.
Forecasting more frequently is critical, depending on your business type, it can either be weekly or multiple times a month.
Range forecasts will provide a broad view of the future. It focusses on several outcomes, and teams can proactively plan on the best ways to prepare for different scenarios. It also highlights critical assumptions and volatility in drivers.
Accuracy in a crisis is less important; what matters more is information that guides the business to plan and prepare for several scenarios. A sensible starting point would be to identify specific risks and opportunities that align within a range (low and high estimates). In other words, what value is small enough that the actual estimate will likely fall above it. And then the other way, what value is high enough that the actual estimate will probably fall below it.
There is no one size fits all when it comes to forecasting your scenarios. Using different types of forecasts for revenue, cash flow, cash, expenditure, etc. Examples in the table below:
|Revenue||Competition, Market share, Demand – External factors play a crucial role in range setting|
|Expenditure||Tighten ranges around headcount and marketing. Set ranges for sustainability and supply chain.|
|Cash||Updated regularly, if possible daily|
Note that not all functions or business units in your business might require range-based forecasting or even scenario planning. Those more suitable would likely be based on factors such as revenue-generating, volume, or degree of uncertainty faced by impacted function/business unit.
In those instances, you might want to consider determining which line items are most inclined to change and might have a high impact on your business cash flow and financial performance.
At Beyond Financials, we can support you with your scenario analysis, planning and forecasting.
Your scenario planning & forecasting will support you to push through uncertain times, but don’t forget to:
Collect Your Debt
As much as you want to be more lenient towards your customers in uncertain times, you must protect your own business.
Follow up on receivables and arrange a payment plan.
Remember, you still have vendors to pay and need cash to keep your business afloat.
This Xero guide gives excellent tips on receivables and explains how accounts receivable financing can restore your business cash-flow.
Review What We Can Do Without Or Where We Can Change A Process To Save Cash
Investigate ways to cut costs without reducing the quality of your services or products.
Revisit your cash-flow and identify where your money is going and consider what you can change or do without, to reduce spend. Saving money is your key goal here to ensure you have enough cash to fill orders once things return to the ‘new’ normal, and the economy has stabilised.
You should consider to source items elsewhere and save on both item and shipping costs, without compromising your quality.
We are creatures of habit and might be reluctant to change our specific production methods, but there may be a method to refine it and make it more cost-effective and efficient.
Communicate ahead of time when you are planning to revisit headcount or if you are considering pay cuts.
Be proactive and reach out and negotiate short-term relief with your investors/lenders. Look into government relief programmes.
Change Your Marketing Strategy
Remain visible with your current customer base, meet them online, send newsletters, and keep promoting your service or product online. Be Creative!
Brand awareness is the two keywords in uncertain times to ensure your business survives.
It is not necessarily the right approach to cut your marketing budget, but you should have a strategy. Utilise social media and other digital platforms. Pivot your business to the interests and needs of your customers during this uncertain time.
Keep in mind that your customers are now in a different space. Interests and needs have changed, and you need to identify which services or products are still relevant and adjust your offerings accordingly.
Grab this opportunity to create an online business if you haven’t had an online presence before. The guys at Constant Contact guides you through a few suggestions on starting an online store / site.
‘What Is My Competition Doing?’
Research your competition. You can learn a lot from them and even get a few ideas.
Improve the way you target your customer base by evaluating their advertising and online presence on social media and digital platforms.
By doing this, it might help you in modifying your business, offering new services or products, and prospering where they are lacking.
Stay Positive & Rebuild Your Business
It is difficult during uncertain and trailing times to stay positive, but that is the best thing you can do. Keep in mind why you have started the business. Revisit your mission statement and remind yourself of the journey you have been on already. Redirect your thoughts to the future of your company after this unsettling time.
Incorporate your learnings and insights you have uncovered during the disruption and enhance your business. Focus on your profits. You need cash! Be open to new ways of working and possibly a new business model.
And always be prepared for the next crisis or challenge. Be sure you have enough cash for the next emergency or uncertain time.
We have sound experience in training & mentoring key stakeholders such as business owners, directors, and management in identifying, developing & implementing change. We can assist you with forecasting and scenario planning as well as guiding you through strategic decision making and change in procedures and processes that can improve your business outcomes.
Partnering with Beyond Financials provides you with highly qualified and experienced professionals who will deliver the required technical expertise, innovative mindset, market intelligence, and business acumen for maximum business benefits. Working alongside business owners and management teams, we aim to increase their business and financial knowledge and understanding through our training and mentoring.
Visit our website to find out how we can support you with Financial sense for business success.
Helpful links – Beyond Financial:
Other External Links
Government grants : https://www.business.govt.nz/covid-19/business-finance-guarantee-scheme/
Constant Contact : Starting an Online Store https://blogs.constantcontact.com/what-you-need-to-know-before-starting-an-online-store/
PWC 7 Key actions to mitigate the effects of COVID-19 : https://www.strategy-business.com/blog/Seven-key-actions-business-can-take-to-mitigate-the-effects-of-COVID-19