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Do You Know How to Survive Tough Times?

What Do You Need to Manage the virus induced downturn?

Thousands of businesses will close this year.  In these days of covid-19, many remaining businesses are in grave danger of failing.   They may be sound businesses that could well survive in the world we now find ourselves of furloughing, lockdowns and borrowing.  However, the big question is do they have the tools to manage their way through this crisis.  Owners are suffering stress and sleepless night worrying about the situation.

Many businesses have in the past good times have been running information lite.  This was OK until it was not, there are no grey areas in between.  Perhaps they ran on the bank statement or the year end accounts to assess the financial status of their businesses.   These approaches are no longer fit for purpose.  One needs to be on top of one’s costs, potential sales and collectibles as well as knowing what your short-term outlook is in terms of your profit and loss and cashflow.

Cash flow is not the same as profit by any stretch of the imagination.  Understanding this difference is critical to good decision making. The working capital cycle is a real source of funding if you know how to work it.

It is not all doom and gloom.  One might be surprised how long a business in trouble can keep going with the right management tools.  The journey might be to better times or a different business model or some spin-off that suddenly becomes viable.  The journey needs management and management needs help to cope with the unforeseen circumstances.

The business owner needs a business advisor who understands the numbers and who can help you make sense of the information and use it to return the business to profitability while husbanding the cash resources.

Critically the advisor will help you come up with a costed plan that enables the business to survive within its currently available resources and then to move forward in a way that will help you achieve your goals in the longer term.  The advisor will keep the business owner on the right side of the law.  They will help you implement the plan as well as training your inhouse team in preparing, understanding and using the information to run a profitable business with positive cash flow.

The tools you need to do this include:-

  1. A Realistic estimate of Sales in the coming months with best, probably and worst case scenarios.
  2. A cash flow forecast prepared on at least a weekly basis for 6 weeks and months after for 6-months.
  3. Up-to-date management accounts that show clearly where the business earns its money, what the key service or product areas and margins are that make or break the business, that analyse your costs in a way that enable you to take action to change your cost base.
  4. A comprehensive inventory of your commitments from which you can determine your cash needs over time.
  5. A list of money owed to you by customers and a process for collecting it.  This will necessitate conversations with your customers about their position when you can expect payment.
  6. A list of money you owe your suppliers from which you can plan payments.
  7. A statement of your staff and their related costs that you can critically assess in the light of a reduced or possibly increased sales requirements.

A Free Offer for Worried Business Owners

Call to see if we can do a Profits Diagnostic Review for your business?  This is completely free and could be the start of the road out of the Covid-19 crisis or to something better than before. Please telephone 01438 811771 to see if this will help you.

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