We all find ourselves in something we could not have imagined only a few weeks ago. CV19 is unprecedented, TRUE as is our Government response. It is going to be very challenging, TRUE. Is it a time to panic – definitely NOT. Should we be positive, YES. Can we come through it, YES. Is it going to present opportunity, YES? What should we be doing?
We should be battening down the hatches, motivated by the challenge and medium term ahead. True for many of us our short-term profits will be hard hit but think about how we move to stronger balance sheets in the longer term. A marathon not a sprint so to speak with a hurdle to cross.
Think cash flow – it’s the only page in your accounts that matters
A very wise man once gave me, some very wise advice, our business was entering a recession, he said “if you are going to make cuts, go twice as deep now as you think you need to go, because when they take effect things may likely be worse”. Don’t be worried about how deep, it’s about being able to recover.
Recessions are opportunities, it is easier to have a good clear out, make yourself leaner and more efficient for when you come through. Use the opportunity to shape your team, focus on the good business you do and dispense with the unnecessary. Sharpen everything up.
If you can invest now, it will never be more cost effective to do it.
Decisions – surprisingly in business in a year there are not many important decisions to make, probably less than eight. There will be no more than eight now. The smart thing is knowing which they are. Then focussing on them.
The government has come forward with a range of packages – use them. But be careful about taking on loans that need paying back. More debt is not necessarily going to help you survive. You need to preserve your reserves; they are your strength. By all means borrow to sensibly invest, buy that machine or piece of equipment – do not borrow to keep on staff or to pay bills when others have not paid you.
Sad though it is, if you need to lay off members of your workforce because you will likely not need them when we’re over this – do it. In many businesses’ wages are the biggest bill – the present is about survival for many businesses. Calm reassurances from No 10 are one thing, you are at the coal face. You will save your business and strengthen your business by the decisions you make, if Boris helps that’s a bonus.
In terms of practical advice
Talk to your suppliers and those to whom you owe money – you call them before they call you - develop a deferred payment plan or payment holiday.
Talk to your customers – even if they cannot pay you in full – discuss their paying something and making a regular payment
Talk to your bank, be careful with them. Check the small print, don’t sign anything unless you are comfortable you can handle the downside. Many of us remember their heavy hands in 2008 rather than their smiling recent faces. Beware they could still be a smiling mafia. Let us see if they are more supportive this time, I hope so. I don’t think a heavy hand will look great this time round. Perhaps we could take some cautious comfort from that.
I shall finish with Warren Buffet – “when those around you are fearful be brave.” But be sure of your ground. Remember every one of us is in this.