Edition 214 – Fluid Situation
Right now, we’re in a completely fluid situation in terms of the COVID 19 outbreak. Companies are having to make rapid decisions to deal with what, in essence, seems like a war situation.
When cruise lines go from imposing 100% cancellation fees one day, to full credits the next, to suspending cruises for 30 days into the next week, you know this is unlike any situation that most of us have experienced in our lifetimes.
Following on from Monday’s special edition of Growth, here’s what you need to be doing financially, right now, to see yourself through:
1. Accessible Cash
- Assess your current cash reserves.
- Assess what short term funding is available to you under your existing facilities.
- Consider what personal funds you may need to contribute to your business to ride this time through.
2. Talk with your Banks
- You should speak with them before the end of this week about additional funding options available to your business.
- Ask your bank what their lending criteria are in the current times?
- Find out what information your banks need from you, right now, to accelerate any loan applications.
- Strategise how you are going to pay any funding back and over what period of time.
3. Cashflow Forecasts
- If you don’t have them, you need to reach out now.
- Now, more than ever, these are critical to assessing how your cashflow will fair over the next 4 to 12 weeks.
- You need to consider 3 scenarios with cashflow forecasts:
- No change in revenue.
- Revenue down by 33%
- Revenue down by 50%
4. Supplier Communications
- You should be contacting them and finding out what their supply lines are looking like.
- What are their payment terms and how are they enforcing them in these times?
- Who do you need to speak with that can offer alternate supply in the event your current supplier can’t?
5. Profit First Family Business Budget
- Most family businesses don’t budget at all.
- Those that do focus on calculating revenue first, then determining expenses – with profit being the afterthought.
- Instead, family businesses should be focussing first on their profit target, then determining the expenses they need to run their business.
- That will then give you a revenue target to aim for – and will be the foundation for a sales and marketing strategy that should drive business growth.
Now is the time for action. If you’re not already doing any of this in your family business, you’re leaving too much to chance in a highly fluid situation. Yes, things may change as quickly. However, this is about strategising a financial defence mechanism for your family business at a time when no one knows from which direction the enemy is attacking.
This Week’s Tip
Planning for an eventuality that never arises is much better than not planning for an actuality that is already here.