Evaluate opportunities, be brave and take time to reflect – Old Mill offers advice to businesses on how to survive COVID-19
COVID-19 has impacted virtually all businesses across the UK in some way.Whilst some have shut their doors (possibly permanently) others are enjoying the sort of seasonal demand only ordinarily experienced with the promise of a big old chap coming down your chimney in a red suit.
The Government has launched numerous support schemes, which on the whole have been good, but they won’t be able to support everyone, and there is no one-size-fits-all because no business is the same. Here, Phil Mills, Head of Food and Drink at financial experts Old Mill gives his five top tips on what business owners should be doing for themselves.
Number one: Evaluate your opportunities
That might sound like madness coming from an accountant and during a state of national emergency/lockdown. But if you start here then your thoughts won't be constrained by a balance sheet (that doesn't mean that you can ignore the financials – see below) and you might just start to develop ideas that you couldn't have conceived otherwise. Think Tarquins Gin making hand sanitiser!
Number two: Evaluate your financials
You’ll get a range of views on this from ‘experts’ in this area but here are my tips:
- Understand your numbers. If you do already then great, skip this step and move onto tip 3. If not then start with your last set of accounts and go through the detailed pages at the back.
- Understand how many sales you make and look at what it costs you to make those sales. Go through the 'Administrative expenses' and sense check each of them. Then mark up each number as either: has or will change (out of your hands); could be changed (in your hands) and won't change. There may also be some new numbers you are expecting (e.g. new premises rent) – note these down
- Understand your cash flow. Taking each figure above start to build a picture of what will be happening to your cash each week and month. Understanding this for a year is great but nobody has a crystal ball, so aim for three months – life could be quite different three months down the line. Have you thought about any grants you’re eligible for? Have you thought of any one-off payments you’ll need to make? Or interest payments from any new lending? Etc
- Start to model some different scenarios. What would happen if you go after one of the opportunities you have identified? Do you need to increase your marketing spend? Could you share a distribution network with somebody else? What will happen when you change some of the numbers in your control? How will you fund the investment required? Etc, etc.
Number three: Make a decision and get behind it. And if relevant then shout about it
Don’t underestimate the power this could have for you, and if you have one, your team. We are all emotional beings and making a clear decision in uncertain times is huge. If you’ve decided you’re going to deliver locally as a retail offering then get the message out there. If you’re doubling production to cope with demand tell people. If you’re changing your product line (think Burberry production of PPE) then let others know. This is a chance to inspire and make your team proud.
Number four: Revisit steps one to three weekly
Do they still make sense? Do you need to adjust your plan? Does it need a complete change? If required, make the decision again!
Number five: Pause and reflect
What might be the future in say a year or three years? And what are you learning now that should be embedded into the business in the long term? Making a decision is important and saves you from drifting into the future without a plan. I’m really pleased to say that the majority of people I have spoken to have sought to understand the immediate help available to them and are tackling cash flow planning, which is great but only part of the picture.
If you’d like help with any aspect of this then please do get in touch by emailingenquiries@om.uk. We are here to support ambitious businesses.
