Further to the regular updates we are sending to clients and contacts regarding the various support packages available and Government and HR guidance, I thought it might be useful to look at some of the things which are inside our circle of influence and which we can, to a certain (albeit perhaps limited) extent, control.
This economic situation we find ourselves in is unprecedented, and unlike the previous financial crash in that well run businesses will also face cash flow issues over coming weeks and months. So it is more important than ever to put in as much best practice as possible, and if nothing more, you will reap the benefits when we come out the other side. Now is the time, if you are able, to build up your war chest, to look at where your pinch points are and to plan for survival. Remember it is better to anticipate the worst and plan for it, than to drive down the road with your blindfold on.
Do not be distracted from the core of running your business, while it is by no means business as usual, you have a business to run. Use this time to think about how you can adapt and improve – out of adversity and challenge often comes growth and innovation.
And remember also that while challenging times often bring out the best in people, they do also bring out the worst in others. At a time when many businesses are trying to move to remote and online working, and adopting systems and processes which are new to them, the issue of cyber security has not gone away. Indeed there may even be an enhanced risk. Make sure that while speed is imperative, so is protection, particularly if your employees are using their own PCs and or laptops – if something doesn’t look right, it probably isn’t.
I’ve split my list of other ideas and possible actions into three areas – Cash, People and Supply Chain. It is by no means exhaustive, but hopefully gives you some ideas of what you might be able to do to run your business as well as possible during this time.
- If you don’t already have a cash flow forecast in your business, now is the time to ensure you do. Forecast the next three months, and review and update at least weekly, preferably daily.
- It is essential to plan your cash flow forecast, even if you are not struggling now!
- Review your credit control process – invoice as early as you are able and chase for payment to your terms.
- If you use Xero or other accountancy software, look at the timing of your payment reminders and perhaps set to remind in advance of due date as well as at one day overdue.
- Review your overheads and cancel or put on hold any non essential expenditure.
- If you do need to delay outgoing payments, work with your suppliers to agree revised terms and payment plans – they will be having as difficult a time as you are.
- Look to request payment in advance from clients where you are having to pay associated costs which you would then normally recharge to your clients.
- Or perhaps deposits, in some circumstances even full payment, before work starts.
- Talk to your bank, HMRC, suppliers, customers, accountant and other service providers. The sooner you ask for help, the more likely you are to get it. Ensure you have a long term plan which shows your strategy coming out the other side of this situation if you are looking for loans or other financial support. Make sure your business plans for any loan applications are realistic – funders do not like to see their clients underachieve when seeking funding. Now is the time for open and honest communication.
- Review your client list – who are the high risk clients?
- we have been making daily calls all week to those clients most at risk to see how we can support them, even if it is just someone to talk to.
- Plan for the worst case scenario – how long can you run the business for with no income before you run out of cash?
- Call HMRC on their Helpline (0800 0159 5599) to agree time to pay arrangements for any tax liabilities – do this before your deadlines become due.
- Understand your staffing levels – what can you do with minimum staff?
- How Robust are you? Robustness is a term meaning that everyone in your business can do three jobs, and each job can be done by three people.
- Who on your team can step up should senior people become unavailable?
- Plan cross training of individuals now.
- Look at A and B teams. If your place of work is still open, can you have an A team working from home, so that if someone on the office based team becomes infected, then a replacement can come in to replace them.
- Talk to your team – often they will come up with solutions which will help you.
- Talk to them often also to keep them informed of your plans. Update them even when there is nothing to say. They will be more worried than you may imagine.
- Directors and business owners – lead by example. Preserve your cash and do not draw salaries if you can afford not to.
- Likewise, do NOT delay making adjustments and changes where business needs dictate.
- Review staff contracts and terms and conditions, talk to them about flexible working and flexible pay – people are likely to prefer reduced pay for reduced hours than to lose their jobs. (Take HR advice – if you need an introduction to someone great, please let me know!!)
- Can your team take their annual leave now during quiet times?
- Review your workload considering
- what is business critical?
- what can you put on the back burner?
- what should you focus on?
- Make your plans visible and keep your team informed
- Understand your upstream too to ensure your ‘cog’ is unaffected
- Do you have a clear mapping of your supply chain? Not just your direct suppliers, but second and third line. You need to understand their pinch points and challenges as these will effect you further down the line.
- Have conversations, and quickly. Do NOT rely on email communication – it’s too easy to ignore and hide behind. This is a whole supply chain conversation and you need to know you have an end to end solution.
- Communication is key!!! As always. You need time to plan.
- Understand who future suppliers may be or may need to be. Local supplier may be more expensive, but will be worth it for continuation of supply and service provision. Likewise as the UK faces it’s own potential lock down, you may need to look further afield for alternative resources.
- Stay lean, don’t bury head in sand and be aware that this is NOT business as usual
- Nor it is a short term issue. No-one has a crystal ball but we do need to plan 9 months ahead where possible.
- Review key contracts with customers and suppliers in accordance with your insurance policies
- Check force majeure clauses with your provider
- Consider movement of freight issues – good are still moving and expected to move for the foreseeable (short term at least) future, but what if this changes – what plans do you have?
Remember the words attributed to Darwin, that is is not the strongest nor the fittest, nor the most intelligent of the species that survives, but the ones most adaptable to change.
Stay agile. Act quickly. Look after one another and particularly those most vulnerable.
As ever, we are here to help, but do please bear with us if response times are a little slower than you are used to.