The impact of coronavirus on your company is probably all you’ve contemplating over the past few weeks. Sales have dropped, or, more importantly, you’re now shut down during the period of shutdown. It’s a full-blown economic crisis driven by a pandemic along with macroeconomic indicators. So what do you have to do?
More than any other time, the solution is business planning. If you do, this is currently in the works. You could be calling your contingency plan, emergency strategy, disaster planning, or anything else.
If you’re trying to figure out where to start, I would suggest focusing on maximizing cash flow. After that, you’ll need to step back and examine the larger image of your business strategy. It can be uncomfortable to begin or revisiting this process during an emergency; however, it’s the most effective method to ensure you’re making informed decisions that can help you navigate through uncertainty while also allowing you to grow when things settle down.
A business plan that is in place connects the dots
Changes within or around your company do not negate the necessity for planning. It is the time when you require business planning the most. In particular, if you’ve got constant sales projections and budgets for expenses that are linked to the forecast, you’ll be able to see when you’re making quick adjustments in response to abrupt changes.
Good projections link the dots between costs, sales, and expenses, providing an overall view of your finances. For instance, this basic line chart is derived from a business plan that is already in place and shows the real-world situation amid a crisis.
These are only the highlights. It is a comprehensive strategy
These examples are just illustrations to give you an accurate overview of the situation and help you begin making changes. It is essential to look into the entire financial spreadsheets that comprise your entire business plan. You will find examples at the end of this article. Of course, the ideal scenario is that you have a plan that you are regularly looking over and revising.
If you’re not already, this is the time to put together an outline of your business and forecast. Although this might seem overwhelming, you don’t require the full business plan at this time. Instead, it would help if you started with a simple and quick lean business plan. In addition, it will aid you in planning your financial activities and your business in the coming months. If this seems unattainable at the moment, then at a minimum, you should make some financial forecasts.
Make emergency changes in your company’s plan
This article doesn’t need to remind you to reduce your costs. We already know that. If you’d like to get started on our solution to our case study below, go here. But, if you’ve started to cut costs, but aren’t sure what else you can do, here are some helpful tips:
Be aware of the consequences before you cut your payroll
Our company made it through the recession of 2008-2009 without letting anyone go. Andew, watched the plan and the plan against it. Fundamental indicators with great attention and cut down on other expenses first instead of individuals. She highlighted that it’s expensive and short-sighted to let go of people who are skilled, knowledgeable, and committed, especially when you’ll need to incur the cost of hiring and training them again within a couple of months, as long as things improve.
As I type this, federal and local government officials put together incentive programs and safety nets to reward companies who keep employees in place. Today, the most effective options include the Economic Injury Disaster Loans and Payroll Protection Loans. They can be great ways to reduce costs and increase your cash-flow runway.
Before you decide to let individuals go, you should look at the benefits tied to pay because some of them are easier to eliminate than others. Although, of course, you don’t need to cut health insurance, however, you may have certain career development, learning, or retirement-related plans that you could cut back without harming your employees in the long run.
There are a few options to think about when you want to reduce the number of employees you pay
If worse happens to worse, you have options before letting them go:
- Freezing hiring can be a little painful, but it ensures that you’ll be able to keep the current employees.
- Reduce the salaries of your leaders, or your most important managers, tend to be more closely connected to the business, more attuned with the fundamental values, and better positioned to recognize the need over the normal staff and rank. In truth, it’s simpler for those with higher salaries to survive a cut than those with lower salaries.
- Reduce all wages by 20% and share the burden equally. But then, it’s a crisis, and most people can comprehend the need, particularly when a solution like this prevents job losses and keeps jobs waiting for them once the crisis has ended.
- Layoffs In life, things happen and this, unfortunately, is a reality often. Make sure that you’re cutting people off to ensure your business’s viability, not for profit. Our revised business plan, adapted for the current economic crisis, doesn’t include profit. We’re just trying to limit the impact of the crisis and ensure our employees’ existence.
Certain expenses are linked to sales and can reduce themselves
In many companies, certain expenses referred to as “non-discretionary” will automatically fall as sales decrease. For instance, companies that sell physical goods through retail stores typically have co-promotion fees tied to the sales they charge. Likewise, transportation and limousine businesses conserve gas since they don’t need the same number of trips. So it could be a factor in your company too, be aware of that and note it.
Review general marketing expenses
Be a good steward and trust your intuition regardless of the midst of a recession; some marketing will continue in the majority of companies. It is possible to shift your marketing strategies around the current crisis and find new markets or uses-cases that your business can market. However, not all marketing strategies are alike, and some applications are more efficient than others, and certain programs are easy to eliminate until the crisis is over.
Disclaimer. The opinions and views expressed in this article are the authors Shalom Lamm.