Most businesses that survive the next 24 months will be all the stronger for it and in some ways you could say, will have become ‘tough as old boots’.
So, how do you give your business the best possible chance of getting through the next 2 years and becoming stronger because of it?
As a business owner myself, I’ve detailed below what I can consider three essential requirements to building a stronger, more resilient business. I have done these myself and it has and is helping.
I have also seen the positive impact it has had for our clients.
The three essentials are:
- A business continuity plan.
- A 3-month cash flow forecast
- A 12-month profit forecast
And…I’ve added a fourth requirement which you should also do!
Why you need a Business Continuity Plan
A plan will give you peace of mind and clarity for decision-making for the future of your business.
It will ensure you access Government support entitlements and maximise opportunities to preserve your cashflow and profitability.
It will provide certainty and peace of mind, giving you a degree of control over what is happening
It will help you move away from the fear zone – the uncertainty of what is happening.
Into the learning zone where you will understand the support that’s available.
From there you can move into the growth zone where you start to build a more resilient business.
The other requirements detailed below and work on the same basis, helping you more from fear, learning about what Covid-19 means and how you can then start to build a better, stronger business.
Why you should prepare a 3-month Cash Flow Forecast
In today’s uncertain times there is little value in forecasting any further ahead than 3 months, especially if you’re unable to work at the moment.
What’s the point of a cash flow forecast is we’re not working?
It will force you to manage expenditure:
- What is essential for the business that you need to keep spending
- What is a ‘nice to have’ that you can do without
- What costs are luxuries and aren’t needed right now
If you have outstanding amounts owed by your customers, it will encourage you to collect those payments. But remember, be considerate, your customers may well be struggling too.
If you have received a rates support payment, furlough payments, include these.
If you have taken out a loan, include this.
Remember to include the loan repayments – BUT if you’ve managed to obtain a Bounce Back Loan, the repayments don’t start for 12 months.
BUT REMEMBER – use the bounce back loan sensibly, don’t waste it on unnecessary expenses. Use it wisely to help you build your business back up.
Why you need a 12-Month Profit Forecast
You need to prepare a forecast based on the information you have right now and where you want the business to get to in 12 months’ time.
It will allow you to see:
- The amount of new business you need to generate
- The profit margins on delivering work that you need to aim for
- The costs in your business you need to reduce or work hard to control
- If you received a Bounce Back Loan, you will see the additional profit you need to make to cover the loan repayments
This should be a rolling 12 month forecast, always looking 12 months ahead to enable you to implement any changes to give you the best chance of hitting your targets
Why you should meet with your Accountant on a regular basis
To review business performance, discuss problems and issues you are facing and to identify and implement actions to enable you to overcome those problems.
The setting of actions is essential to keep your business moving forward.
The review of business performance is crucial, you need to be held accountable – in a positive way for how you and the business are performing.
For these meetings you to need to identify and discuss:
- What do you need to START doing that you haven’t been doing?
- What do you need to KEEP doing, the practices and habits that are having a positive impact?
- What do you need to STOP doing, those activities which are holding you back?
Accountability from an independent person (not your spouse!) will help you act on and implement the positive actions which you know will benefit you and your business.
If you would like to find out more about how to make your business stronger and ‘tough as old boots’, please get in touch.