When you run your own business, there is always so much to do. In these challenging times the workload, stress and day-to-day concerns has increased three- fold.
We get that. In this article we share some advice on what you should be focussing on within your business:
1. Cash – Cash is King (as they say), when you run your own business you really understand the importance of having Cash in the business. This needs to be reviewed if not daily at least on a weekly basis.
a. Analysis your level of Debtors and Creditors – When cash is due into the business and when it is due to be paid
b. Bank – What cash is in the bank at any one time? You need to ensure that direct debit payments can be met
2. Cash Burn Rate – How many weeks or months of runway have you? This will set out a timeline for what needs to be actioned today and what can wait until next week or next month.
3. Run 3 scenarios in relation to what level will business return to at least in the next 6months. These scenarios needs to be based on as much fact as possible and less guesswork as possible. Review Market expectations, orders on the books and current contracts that are on hold:
a. Worst case scenario, business levels return to 25-30% of where they were pre-Covid19
b. Best case scenario – they will return to 55%
c. Most likely – In reality what is likely to happen?
4. Sales – What is guaranteed? – You cannot assume that orders that were placed before lockdown will still stand. You need to contact all customers and confirm all orders either verbally or in writing. That “big customer” with that “big order” may no longer be in business. Are there other opportunities, new markets, new products to manufacture as a results of Covid-19 and the changing face of the Economy.
5. Stock – There are a lot of questions to addressed around stock and stock levels:
a. What can you use or sell that is currently in stock?
b. What stock do you need and what is the lead-time and costs associated with that?
c. Can the stock be delivered in to meet your demand?
d. What do you need, what do you throw away?
6. Capacity – How much product can you make given the 3 scenarios above?
7. Lead Times – Does cash, capacity and stock impact any of your lead times?
a. For the contract repeat order can you meet your normal lead-times?
b. Can you still deliver orders that were agreed before lockdown at the agreed lead-time
Take Immediate Action – Size Right – Size Quick
We can assist with any financial support applications and are always here for a chat and a coffee (even if it is a virtual one), and we’re ready to jump into action.