Strategies for Our Current Business Climate
This is the second in a series of strategies to use in the current climate. Today we focus on knowing and managing your numbers.
KNOW YOUR NUMBERS
Now more than ever it’s vital that you know the relevant numbers that form the life blood of your business.
Read your financial reports, understand them, and do your cash flow forecasting as well so you can pre-empt what cash impacted maybe in the next month or two.
If you don’t have the following already, request these from us and we’ll prepare as soon as possible:
- Actual P&L weekly and monthly and quarterly
- Actual P&L Year to Date
- Balance Sheet
REVIEW AND CUTTING COSTS
Reviewing and cutting costs definitely is a number-one priority. It's probably good practice anyway to review your costs on a regular basis. So what you would do is get your profit and loss statement and just go through all of the lines and work out whether or not some of those
have blown out or if you haven't addressed those recently. There may be mobile phones that are hanging around that you no longer need. You may need to go back to your insurance broker and get quotes, energy suppliers, all of those sorts of things so definitely do that.
If you do need to cut things, try not to cut expenses that are helping you to grow or to be more efficient. If you do stop spending money on things that are helping you grow and generating leads it's going to be hard to come back later.
Review and redirect your marketing. There are ways to relook how much you're spending on marketing whether it's effective or not. If you don't know what's working and what's not in marketing, know your numbers around that like what sort of return you're getting from different marketing channels or different marketing tactics and really understand which ones are paying for themselves and which ones aren’t. Continue to monitor it over time.
If you're doing Google AdWords for example and you know it's been working in the past just monitor it going forward and see if there is a drop-off and whether you can refine the messaging. Relook at tapping into more about the concerns of people having out there.
Look at your personal expenses as well. It's not just about your business expenses you may need to trim back on but your personal expenses and lifestyle as well.
STAFF CUTS AND CHANGES
Look at staff cuts and staff changes. This can be a very tough decision for a lot of people because obviously your staff and your team's livelihood is very important to you. Look at negotiating holidays and unpaid leave.
You can't force people to take their annual leave but you can discuss with them and encourage them to take the leave. Reduce hours, pay and sick leave obligations, and also be aware of the stimulus support.
It is clear that if somebody's diagnosed with covid-19 or if they're providing care or support to a family member then they have access to their personal and carers leave in the case of full-time and part-time staff. The situation with isolation is a little bit more challenging and confusing. We highly suggest you get specific advice from a HR professional
You can make any arrangement with your employees that's above and beyond the minimum obligations that are required upon you. However, it is generally not advisable that people pay leave in advance. It often doesn't end well.
The first step in my view should be to just try and negotiate with people and just say “look guys, you know unfortunately these things here and it's affecting our business, I don't want to lose the members of the team and I want to keep you all engaged beyond once we get over this hump. However, we need to do something.”
Different businesses will have different levels of cash reserves and different culture so at the end of the day it's up to every business owner what they do and what they can do but definitely it's about the survival of your business and the about survival of your family then you need to do the right thing to make sure your business stays viable for the long term and that you can re-employ when things change.
