It's Time to Act
It is important to remember June and July is when the cashflow pressure of being closed in April will really hit home for business owners, there are three key drivers to this:
The wage subsidy will end for many
The lack of sales in April due to Alert Level 4 lockdown results in very limited cash collections in May
The reduced sales in May results in poor cash collections in June
All of these factors combined result in June and July being the two months when cash will run out for many businesses.
Now is the time to restructure/reorganise/reshape/resize your business for your new normal.
Planning not Reacting – 12 Step Planning Guide
You now need to align your operating model to your projections:
1. First, clear your head, apply the post it note planning methodology (jot down one idea per post it note)
2. Review your profit and loss projections for the next six months and decide if they are reasonable. In doing so consider: was the last two weeks trading a false peak caused by demand that built up during lockdown, with the wage subsidy ending in June will other businesses be reducing staff and what will this mean for your business, are your forward sales “good” forward sales (confirmed orders in writing with agreed payment terms, from a customer that will be able and willing to pay)
3. Work out what % revenue is going to be down on prior year, that % reduction is the minimum level of cost that you need to remove from your business
4. Consider if any customers or segments of your business need to be ceased because they are no longer viable
5. Decide on your operating hours – be innovative here, if you have reduced sales how can you align operating hours to the workload that is available e.g. change your trading hours, have your team working reduced hours across split shifts or your business operating reduced days per week
6. Determine what terms of employment the business requires going forward and consult with your lawyer or HR advisor around negotiating these with your team
7. Digitise and create efficiencies in your processes so that you can operate in a reduced contact world but also so you can operate with potentially less employees
8. Review the prompt list below, are there any other areas of your business that need to be considered
9. Involve your team in the process
10. Now write down the actions you need to take in each area of your business, use our Planning Template here
11. Turn your ideas list into actions, use our Action Plan Template here
12. You now have a plan, start executing on the actions
Be decisive – If you’re taking action, take it once, communicate well and move forward
Make sure you think opportunity… where is the opportunity, don't just focus on problems. There are always opportunities!