Keeping the business afloat in a time of unprecedented change
The year began as any other year, who would have thought that by March our world would turn upside down? The resulting economic downturn will put businesses, from small to large, into unprecedented situations where tough decisions will have to be made.
It doesn't matter the size of the business, when there is a crisis it's all to scale. Larger companies may have more money to lose but it doesn't mean the sting is any different. When it comes down to it, the question that may be sitting at the front of any business Leader’s mind is: Do I go broke today or later? But, perhaps with some experienced help to navigate, you need not go broke at all.
There is so much to consider when trying to navigate through a time of rapid and unprecedented change; staff – and their dependents, loyal customers and suppliers, maintaining integrity. Also, time and timing – we just don’t know what is going to happen. So, how do you keep the business afloat?
Let's start with conventional wisdom, perhaps a loan, about which much is already written. But, is it the right thing and what questions should you ask? First of all, what will it cover in the short term? Also, if you do choose to apply, what will you need to show when you face the lender (e.g. a plan to trade through the downturn, current P&L, etc.), some experienced support will be useful here. Consider cashflow when revenue restarts, what might the following look like? How to retain profit and repay the loan while maintaining your own and your employees' livelihoods, or whether you are simply kicking the can down the road and risk going broke a little later. These may seem like unanswerable questions as we sit here today, but there are ways to get to an informed decision.
One thing that might make you go broke immediately - Refunds. The conundrum is, if all your current cash goes to refunding customers, you will answer the question of do I go broke today. If you keep the money and offer the same services at a later date, will the business be able to also generate new revenue in the same time-period?
Maintaining integrity is likely to be the cornerstone of your business, in which case there needs to be a plan of what to do with your customers’ money and how to communicate that well. Customers, suppliers and your team are affected by the situation in different ways that may not always be what you expect. So, communication becomes vital to keeping customers, vendors and your team happy. We have often found, for example, that where we have helped formulate and communicate a clear, feasible plan to creditors, we have often seen them willing to work with our clients through difficult times.
Hindsight is a wonderful thing. Articles have always advocated a contingency plan with a bucket full of cash, but what happens when, like most businesses, you don't have that cash? Where do you turn? Government schemes, loans, companies offering vouchers instead of refunds, creditor negotiations or maybe selling your assets? Take a step back - breathe - the right support can help clear the wood from the trees.
This was never going to be an easy time; the current crisis has seen to that. Some immediate support from people who have the experience, expertise and track record in difficult business situations might just mean you don’t have to go broke at all.