All of us need to make some changes financially through the next months. Here are some thoughts on ways to adjust your business, but most will apply to your personal life as well.
1. Know your numbers. Keep your accounting entries up to date and stay on top of where you are. If you’re normally a ‘do it when I have to for tax filing’ kind of person, change that behavior and enter things now so you have facts on your financial status.
2. Use a budget. I suggest a budget with at least two columns – one for the expected and one for worst case (maybe 20-30% less). Compare your real financial info to the budget at least monthly but more often is better. Any good accounting package will let you compare current to budget. You need to see when you’re deviating from the plan.
3. Conserve cash. Cash is king – always – so look at your expenses and see if there are things that should be temporarily ended or deferred. A report you should track is ‘free cash flow’ which is the amount of cash available to do business.
4. Talk with your experts. Now is the time to discuss the potential of a longer term financial slowdown, or even recession with trusted financial advisors. Preparation is essential.
5. Have a bank line of credit in place. Banks loan money to people who can prove they can repay it, so don’t wait until there is a need to get a LOC set up.
6. Stay close to clients. They will face the same challenges you do, so connect and assure them you will be there to help them through the chaos. Find ways to bless them from afar but lets them know you are in the boat with them and thinking of them.
7. Take care of your people. School closings will create issues with childcare. Financial pressure will become an issue for some. Listen carefully and help where you are able. This builds loyalty that is never forgotten.
8. Over communicate with your team. Everyone is facing a new normal and the more we can communicate the facts and details needed to serve clients, the more effective our team will be and more empowered they will act.
9. Work from home will be the immediate reality for many. Do what you can to enable your team to be productive outside the office and share that freely with your clients as well.
10. EBITDA and the balance sheet matter. Don’t lose sight of the reality that you have to stay in business to be able to pay your team and serve your clients. There will likely be concessions that need to be made to help others, but you have to keep perspective on the truth that bankruptcy helps no one. Care, help but don’t go overboard and destroy your own company in the process.
11. Pay close attention to the sales pipeline. Things will be disrupted and likely pushed forward, so stay on top of where deals are and make sure they don’t drop off but are continually moved toward a close.
12. Evaluate your people. No one likes to consider downsizing during a difficult period like this. But if it comes down to reducing your team or losing the business, there is a clear choice to be made. Create a RIF list (reduction in force) before it is needed so emotion and personal feelings don’t get in the way of making the best decision if it comes to that.
13. Planning is always a valuable tool. Take time to plan for contingencies, but also opportunities. This too will pass, and as it does, there will be significant opportunities for those who are prepared and have a plan.
14. Stay calm and press on. As leaders, all of us need to stay calm and keep things in perspective. Sometimes that means we have to pretend a bit when we’re overwhelmed and unsure what’s next. But we simply need to put the next foot forward and keep walking.
15. Start planning for the celebration when this is contained. People need something to look forward to so plan a party and keep pointing people to something special to come.
Things will likely get worse before they get better. We all will have to find a new normal and make significant adjustments to our daily lives. But the virus will be contained at some point, and life will begin to return to normal eventually. It will likely never be exactly as it was, and we all need to learn things from this experience.
As we turned the page to the new year of 2020, it looked like we were on a rocket ship of prosperity unlike any previous time. Now we’re facing the biggest decline in market history and a threat to our entire planet of a virus with no treatment or cure. That’s about as opposite as you can get. Yet through it all, God hasn’t blinked or moved. He’s still the same yesterday, today and forever. Our only reliable response is to lean into His love and caring arms. He alone can provide us the comfort and hope we all need!
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