Now is the time to plan for post-pandemic business recovery
While the debt that COVID-19 disruption has thrust upon the economy is unprecedented and businesses are grappling with uncertainty and dwindling cash flow, they must plan for a post-pandemic future in order to ensure both survival and recovery, an expert has said.
Businesses that have locked their sights on building cash reserves, helped by the numerous relief programs, are doing the right thing, but they’ve got to turn their gaze forward and plan for a post-pandemic market, Australia’s leading small business coach, Stuart Donaldson, told sister title, MyBusiness.
To help businesses navigate this tough new world and give them a fighting chance at survival, Mr Donaldson will join MyBusiness on 19 May in a masterclass on mastering cash flow.
Recognising that SMEs right across the country are hurting, Mr Donaldson believes that while survival is key, a number of steps can be implemented today to ensure a business thrives beyond the pandemic.
“It all boils down to cash flow,” he said.
“What does your cash flow look like, not today, but in a week’s time or a month’s time or a few months’ time?
“If you’re looking forward like that then you can start to plan and prepare. So, if you find that your revenue has fallen off a cliff, your costs are hurting you, your profits are down, you’re potentially losing money, then you’ve got to start thinking, ‘How am I going to fund my way out of this so that I am still here and able to survive this crisis and, in time, rebuild the business?’”
More often than not, businesses overlook the importance of forward planning. But by devoting their attention solely on the here and now, business owners risk being ill prepared for the future, he cautioned.
“What comes next is something we haven’t experienced before, because in many cases for a lot of businesses that are asset intensive, they will find that as their sales decline, their cash will start to drop,” he said.
“For instance, retailers, their stock might be old as we enter a new season, or it might be obsolete. Their supply chain will be disrupted or in some cases broken, so when you look to ramping back up, it’s a different ball game.”
He opined that it is this different ball game that businesses must plan for today.
“Our focus on the webcast is very much on two things: survival and then revival. They are fundamentally different. Survival is about building your cash reserves as much as you can, and revival is about managing the market turn amid so much disruption,” Mr Donaldson said.
“We will be talking through all of the things businesses can do to build their cash reserves and stretch their weekly cash flow, so that the period of time they can continue to operate, even in hibernation, will be prolonged.”
Besides sharing valuable step-by-step information on key short and medium-term steps, Mr Donaldson will also introduce the MyBusiness Live audience to an effective cash flow calculator, vital for future-proofing.
“There are two version of the cash flow calculator. The first one is a 13-week calculator, because during this crisis you really have to look at your cash flow weekly. The other one is a monthly, 12-month calculator. I would advocate that you really need to be looking at both,” Mr Donaldson said.
“It is a very practical tool to work with and it does allow business owners to look into the future and look at where their cash position will be, taking into account payments to suppliers, grants, relief from lenders or the cash flow boost from the government.”
Acknowledging that SMEs are doing their best to survive uncharted territory, Mr Donaldson promised a packaged session with valuable learnings that business owners can apply immediately.
“By implementing the initiatives we will be running through, business owners may well give themselves a fighting chance of survival,” Mr Donaldson said.