For most business owners, the current crisis has dealt a double whammy. They not only have to worry about the health and safety of their family members, but also worry about their business and ensure ways to keep it afloat. As decline in sales or a total stop in production hits home, there are now fears of business failure.
So now is the time to take drastic measures and not panic. The focus, right now, should be to maintain the necessary cash reserves to keep the business going as well as work on improving cash flow. Here are some important strategies to consider.
Increase liquidity
The most important measure that the businesses should now focus on is to maintain adequate liquidity to keep your business running. Focus on the accounts receivables and be persuasive in getting the payments from your debtors. Give discounts or good prepayment terms and push for getting online
payments. Pull in cash from all sources Delay capital spending until times are better by avoiding purchase of new machinery, acquiring new space, hiring additional staff etc.
Maintain Strong Relationships with your Lender
If you already have a loan, make sure you update your lender about your contingency plans. Request them for some kind of waiver if possible like deferring repayments or increasing the loan term to reduce EMIs, etc. Do not default on your payments though. If you are sincere with your payments, lenders will be more than willing to extend their support.
Stay in touch with your customers
Whatever you do, stay in touch with your customers. Continue to send them emails and newsletters about how you doing your best to keep your business going. If you’ve had to temporarily close down your operations, inform them about the same and assure them that you will be back as soon as possible. Be available for them. Answer questions online, email or phone. Never ignore customers.
Do not Sit Idle
Throw out your old plans and start a fresh business plan suitable for the current times. Critically analyse your own plans to suit the current business environment. You may have a hard time finding new customers or growing sales when the economy opens up again. You may need to be aggressive in selling, and rather than increasing inventory, focus on reducing inventories by giving out more discounts and keep the core operations running. Keep the energy and maintain an air of positivity.
Revisit cost structures
With operating risks running high in the current economic situation, it is better to move from fixed costs to more variable costs in business. A simple way of doing that is selling your assets and leasing them back, which will give your business much needed cash for liquidity as well as reduce the burden of the fixed cost. Changing business practices to suit these uncertain times may help in minimizing the risks of losses by bringing down the break-even point.
Look for the silver lining in the cloud
Tough times make survival difficult. But it is the crisis that brings in new unseen opportunities for businesses to rethink, innovate and grow. The need of the hour is to go online and shift the business practice to one where to provide deliveries. Reinvent your supply chain to provide home deliveries to customers wherever possible and revamp your
websites and apps. It is time to consider alternate or non-traditional modes of business to generate revenue.
To survive during this crisis, it’s important to take advantage of the downtime. You cannot sit down and wait for the economy to turn around. Ask yourself tough questions, make course correction, look for alternative lines of revenue and ways of survival, build your cash reserves and plan now for the post-Corona future. With a positive attitude, out-of-the-box planning and strong leadership, your business will survive.
