To increase your company’s odds of surviving the pandemic, you need to take a very close look at what you are doing today — and what you should be doing going forward.
“Understand the basics of your business, assess the damage that has occurred, reflect on the past, present and future of your business and embrace the new day,” says Betty Collins, director at Brady Ware.
Smart Business spoke with Collins about the things you can do to help your business thrive.
Where should business owners start to address a changed environment?
If you want answers, you need to ask questions. What are the basics of your business? You may think you just need revenue, but do you have the right revenue? Are expenses in line with revenue? And don’t forget to account for debt and what you take out of the business.
- Your customers. How have they changed? Are they going survive?
- Your partners. Your advisers need to be engaged in this moment, because there is a tremendous amount of information. Staying with a partner just because you always have could be costly.
- Your vendors. Will they still be around in six months? If they pivot to survive, can they still play a role in your business?
- Your marketing. How does that need to change? In restaurants, if you are planning on dining in to carry you, you’re in trouble. And if you’re not doing curbside and are still marketing buy-one-get-one-free coupons, that doesn’t work.
- Your company structure, business model, budget and leadership team. Are they still right in the COVID era?
What is the next step after that initial dive into business basics?
Assess the damage, keep moving forward, plan and map it out, and remember that hope is not a strategy.
Look at how much revenue you’ve lost and how many of your customers are out of business. Is your cash higher, or lower? If you’ve taken PPP money, have you taken into account paying taxes on that?
Forecasting and budgeting are not optional. Your cash flow may have improved, but is that because you’re not entertaining and you’re not traveling? You’ve saved that money, but you’re not out establishing relationships.
Slashing inventory and letting employees go may also have improved cash flow. But do you have the capital to rebuild inventory, hire back employees and get back out into the marketplace? Your cash flow may be giving you a false sense of security.
How should an owner look ahead?
Look beyond 2020, beyond a COVID vaccine. Some things will go back to the way they were, but others won’t. Determine the things that won’t and adjust accordingly. When restaurants go back to full capacity, people won’t want to eat in. And they won’t go to events with 100 people.
You need to think of different ways to get customers. Ask what opportunities were created because things have changed and what opportunities you may have missed out on, and take advantage of them.
How can owners reset, both businesswise and personally?
It’s a new day, and you have to embrace that. But you also need to deal with fatigue. Shut down social media and try to stay positive and energized. Replace the things that have been taken from you and find things that bring happiness.
If you don’t have the mindset that this is a period of renewal and reflection, you won’t be able to assess where your business is. And if you don’t assess and adjust, if you don’t face the reality of this new environment, you risk losing everything.
Insights Accounting brought to you by Brady Ware