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This week has been utterly bizarre. I am reeling as I'm sure most of you will be as we mainline news channels and social media for the latest update. We are for sure entering unprecedented times, where a "new normal" is becoming more and more likely. So much is unclear, and unpredictability will be our primary narrative. But we have so many commonalities between us: experiences good and bad, that if we share, could help in significant and meaningful ways. This isn't a pithy statement, it can be the difference between a business making it or not, so this is step 1 in how I think I and we can help each other.
What I am determined to ensure is that our community, both our people and our customers, don’t feel alone.
We’re supporting our people in working from home, conscious that childcare, mental health and communication needs must be prioritised in a new way. It’s early days, but our open and over communicating approach appears to be working, and our people are supporting each other through it with never ending memes and virtual coffee breaks. No wonder Zoom’s stock has been on a steady incline since Corona made itself known (Zoom is video conferencing similar to Google Hangouts)
But you are our community of customers. We must help you now and at greater lengths than ever before. Tools we have built are even more relevant today, but help from us should come in more guises than tools alone. Being alone, or feeling alone in your business is something that need not happen. So this is the first of many posts, videos and hangouts or webinars that I’ll be leading with you, that aim to give immediate practical advice that can impact you and your business positively today.
Today’s focus: What’s the worse case, how do you know and what can you do about it?
I’m done with vanilla, generic advice written by people who have never run a business. It’s clear they don’t know how it feels when you’re staring down the barrel of an empty bank account with suppliers and payroll looming. Nor what it is like when your people look to you for guidance, when you haven’t got the answers. I get the realities, which all too often manifests in insomnia, but this isn’t this the life of founder/ entrepreneur/ leader/ owner (however you identify)?
This morning I recorded the video below. It’s 20 minutes long, BUT it will contain something that may help right now. If you hate numbers or have a partner “who does the finances", and think this isn’t for you, STOP. This is your business and you need to get on top of the basics of your possible business future. It’s easier than you think and will give you more control. For those of you that love numbers, you still may learn something. That’s the first part, then, there are some immediate tactical take-aways if you read on, that you can do today which may extend your cash runway.
You’re going to have to think about some hard things when watching (and doing) it, but this is not the time for sugar coating. Start thinking about these scenarios:
What if you lose your biggest client? How long can you survive on the revenue from other customers?
What if revenue generally reduces by 10%, 20%, 30%? What % is the red zone? This could be because you lower prices or demand reduces.
What if your cost of sales prices rise by 10%, 20%, 30%? What % is the red zone?
What combination of the above is devastating?
What if customers pay you much later? +15, +30, +60 days?
Now hit play. It’s from my heart, and what I’ve been doing (and will continue to do) in our business. 20 minutes that may just make a difference to you.
This is the action plan from the end of the video. I’ve done the majority of the things in the list below in one of my businesses.
Get in the weeds. Your accounting package is yours, it’s your business exposed and just does not have to be a scary place. Sometimes you can find money if you go looking for it:
Obvious, but are there customers that owe you money? Go and get it, now. This article isn’t about product promo, but Flow will tell you immediately on a recurring basis.
Can you agree later payment with your suppliers? You don’t want to put them at risk, but open conversations could buy you a week, and when considering the big, lumpy payments such as tax, timing is sometimes all that needs to be juggled.
When was the last time you bartered on prices for your Cost of Sales or any other overheads? Don’t be shy and get on the phone.
Have you insured invoices that are due? If they are not too close to the due date, there’s a good chance you’ll be able to guarantee up to 90% of the invoice value in Flow.
Is VAT/GST/Payroll tax due? Call your taxation office today and ask to be put on a payment plan. You’ll agree an instalment amount and over how many periods and it will likely be a Direct Debit that is set up on the call. Just do it ahead of the due date, it’s seen more favourably.
Can you get business rates relief? Again, of you don’t ask you don’t get. Some councils and jurisdictions will be amenable to it. UK site here.
In the UK (date of writing, 13th March), the UK government has announced, the "Coronavirus Business Interruption Loan Scheme", which will be interest free for up to 6 months.
Switch utility suppliers and shop around for you broadband. These are not typically going to make a huge difference, but when was the last time you did this? Check out Lookaftermybills.com for automated help here.
Do you owe debt? Loan servicing etc? Again, call the provider. They may agree to a payment holiday.
Contact your bank relationship manager. Unfortunately these days you often need to be turning over a ridiculous amount of money before a bank will even give you one, but if they have contact them. Tell them the situation, you never know they may help.
Are you eligible for any grants? The UK government site is here. The Australian government grant site is here. The New Zealand government grant site is here. The US Small Business Administration grant site is here.
Worst case scenario, you may need to get a loan. Many UK banks will advance £25k without a full 3 year forecast. If you use Xero, Iwoca will fund up to £200k. The criteria will be different for every business and there are other providers of course. BUT, before you take a loan, you must know whether you can afford it. Understand if you can afford the loan first (you can do this in Advisor) - forgive the product placement again, it’s what we do at Futrli and you have 7 days free so use them.
If you use any of these tips, please, please pass it onto any other small business owners you know. When we talk with each other and aren’t afraid to say we’re in trouble - so many more tough situations can be solved. I’m a fan of asking my mates who run businesses, “What sucks for you today?”. It gets rid of the BS, high pitched, “Oh business is amazing!” stock responses.
If there are more things that you think I could add to this article that could help another business, please email me at email@example.com, or @ me in Peer.
Stay safe out there and get help. HD.