With business doors rolled open again, it’s time to knuckle down and assess the damage done by the Covid-19 lockdown. For some, their worst fears will be realised, while others will find the room to manoeuvre and adapt, if their business is healthy enough.
Once you’ve taken the pulse of your business after reopening, your first priority has to be to your cashflow. As you’ll know, this is a constant battle in the war to stay alive, so you need to know what’s coming in next week, next month and in the next three months.
If you haven’t done so already, create a simple cashflow projection that gives you visibility of what your cash position will look like based on different scenarios. You can download a free template in Microsoft Excel format here.
Armed with this knowledge of when cash is likely to come in, you can make contingency plans.
Talk to debtors and creditors
It shouldn’t be surprising that your cashflow improves when your relationships improve. Imagine the pressure relief if you’re able to negotiate extended payment terms from your suppliers and quicker payment from your clients.
Now remind yourself that your debtors and creditors are facing exactly the same pressures. You are doing yourself and your business a huge favour when you manage these relationships openly and honestly.
If you supply goods rather than services, then you’ll be carrying at least some stock. That represents cash that has to be unlocked so that it’s in your bank account, not on the shelf.
Where you can, unload your slowest sellers with heavy discounts and make your more popular products even more appealing with sensible discounts.
This is an obvious lever to pull, because any expenses you cut means you should end up with more profit, and therefore cash. But it’s probably one of the most difficult, because you will have had to cut back quite a bit already.
Prepare for some tough decisions if you want to ensure your survival. If you’re lucky, these cuts might only be of a temporary nature.
We all greeted Alert Level 3 with some relief, but the hard work remains ahead. Everyone is going to have to get their hustle on and fight for every cent.
For cashflow advice and assistance visit simplybiz.co.za.