Navigating the ever changing business challenges of Covid-19
Navigating the Business Challenges of Covid-19
I think we can all say that the recent few weeks have been some unimaginable challenging times. Being in business as usual can be tough in itself, let alone managing business in a world wide pandemic. If you’re a business owner, or you are working in a business that has been affected by the developments of COVID-19, here are some key areas you should be focusing on to safely navigate this unprecedented period.
Know Your Cash-flow With A Cash-flow Forecast
For SME businesses, it’s quite common to have a month-on-month P&L forecast, but if you’re going to be affected by this period, we would highly suggest that you go another layer deeper and have a week-to-week cash-flow forecast.
Managing a business, even in business-as-usual periods, without a cash-flow forecast is a dangerous position. In the absence of a cash flow forecast, you have no idea where you’re going, or even how you’re doing financially.
By modelling your week-to-week in periods of challenge gives you the detail and foresight you need to know, as well as what your cash position is going to be at any given moment.
Create it as you would with your P&L and include the following:
cost of sales / goods
net cash for the week
closing cash balance
Be in the forecast daily with a finger on the pulse of your business.
For larger corporate business it would be worth to build this out to a 3-way statement model. An integrated 3-statement financial model is a model that forecasts a company’s income statement, balance sheet and cash flow statement.
While accounting enables us to understand a company’s historical financial statements, forecasting those financial statements enables us to explore how a company will perform under a variety of different assumptions and visualize how a company’s operating decisions (i.e. “let’s reduce prices”), investing decisions (i.e. “let’s buy an additional machines”) and financing decisions (i.e. “let’s borrow a bit more”) all interact to impact the bottom line in the future.
A 3-way model provides better insight into business decisions, rather instead of relying just on a P&L. Work with your CFO to get this level of reporting up and running so you can make further informed accounting driven decisions. This is crucial if you have a business operating different divisions, service offerings or with different operational brands.
Manage Your Unnecessary Expenses
There will be unnecessary expenses in your business, particularly over the coming months. Your weekly cash-flow forecast should give you visibility into what these expenses are.
The key word here is ‘unnecessary’. Be sure to not cull too much too soon out of fear (like your advertising and marketing budget). After you have built your weekly cash-flow forecast, speak to someone who can help you with strategic advice, and then trim that is not helping you navigate this period.
The ATO has also recently announced that it will provide SMEs with relief in response to COVID-19. While stimulus packages from the Government may take months to reach you, tax relief from the ATO can have an immediate and significant impact on your cash position. More information can be found here.
Focus On Sales & Marketing
The next major thing to do is to keep your focus on bringing cash through the door. In times of crisis business owners do not spend enough time on marketing and sales but instead focus on the operational demands. Especially when facing impacts where health and safety is concerned. Address what needs to be addressed and then quickly switch to marketing and sales activity operating in this new environment.
A great example of this is Dominos early on in the crisis offering a touch-less delivery experience, protecting both the driver and customers safety – delivering not only peace of mind, but also helping to generate business as they have a new message to go out to market with.
Adopt a “cash in” psychological mindset and mobilise your team into business development mode. Now is not the time to be cutting advertising. While other competitors in the marketplace may retract, this is the greatest opportunity to double down. As Henry Ford said,
If your paid search or social media advertising has been delivering quality traffic, but overall conversions are down. Do not have a knee jerk reaction and do not pause or pull your advertising spend! Double down. With a higher increase on people self-quarantining means a lot more people passing time on the internet. An ecommerce boom is just around the corner!
Keep it going and capitalize on the upcoming rebound with remarketing. Focus on capturing email addresses for your email lists. Conversions will return. Pausing them will take longer for AI and algorithms to pick back up again. Do some house keeping on your account if need be, for example with Google Ads:
Remove poor performing keywords with a low-quality score
Make sure all audience sources are segmented and populating correctly
Run retargeted search list ads alongside display remarketing campaigns with offers on your brand terms. Branded search terms for your business have a higher quality score and lower cost per clicks. Import your email database into Google ads and run retargeted in search and display ads. Market to your existing clients and offer value.
If you haven’t done so already – download our Google Ads Management eBook for free here.
Create content, focus on high return activities and make the investment now as well for longer term growth – such as email list building, SEO activities, content and blog creation. Plan your next 3 months of campaigns and develop a plan of attack.
If You Can, Diversify Your Revenue Streams
For businesses whose core revenue streams are already drying up (or already have), this is mission-critical, especially since the timeline around COVID-19 is so uncertain. Judging internationally, China was in lockdown for almost 3 months. Our timeline might be different as we move into our flu season and could last up to 6 months. Think outside the box where possible. Leverage business partnerships and your business relationships to help each other out. We are all in this together. Find other revenue streams where you can that you can derive income from to weather the months where your core revenue streams are going to be depleted.
Think Outside The Box – Get Creative With Your Product Or Service Delivery
For some time, we might need to adapt how we actually do business. For those who run service-based businesses, we understand you are definitely feeling the financial impacts of social distancing and self-isolation.
The key here is to consider whether you can digitize the delivery of your service or mitigate any concerns your customers may have. Think of this as an invitation to innovate and get creative in your business delivery.
Business is predominately a psychological mindset and business is often difficult enough when it’s just “business-as-usual”. Do not try to navigate this time of crisis by yourself and be in constant contact with a credible mentor, advisor or coach.
Just be sure whoever you go to as your mentor has undergone struggles and hardships and has faced challenges before. We have gone through economic discord before with the dot com crash and the global financial crisis. Pick your mentor well and someone that you trust that can speak into your life the things that you need to hear.