The 2020 Coronavirus pandemic has affected businesses big and small. Trying to think beyond the pandemic has been impossible, since we are currently still in the midst of it. It's actively affecting many people, in all aspects of their lives. In normal times, businesses do tend to have long-term plans, but it seems the pandemic has derailed many of those existing plans. However, at some point there will be an end to this. Which means now is the time to look ahead and check your financial planning checklist to make sure your business comes out the other side strong and viable. Having a good financial advisor is one of the most important things you can do. Strong strategic financial plans can get you off to a great start in the brave new post-pandemic world.
At some point in this crazy year, you need to take a moment to look ahead at what your plans are for not only getting through 2020, but for next year and the years after that. To plan you need to look back as well as forward in formulating a strategy for success. Anticipating what your customer will need from you and how you will be able to satisfy that need will help get you on the right track. The world is still scary and many factors can hurt your business. Trying to figure out what those dangers are means looking back at the previous recession and how it affected business similar to yours.
Predict cash flow
Cash flow is an indicator of your business's health, so making sure you have the cash you need to grow and succeed is something to consider. Look at it in a variety of ways. Plan for whatever is going on. Do you have low cash flow? Is it flat,non-existent? Have a plan for all possible scenarios. Some options you may consider to improve cash flow may be:
- Cut non-essential expenses
- Try to extend payments
- Use the CARES Act to help you with payroll, rent and other allowed expenses
- Get low-cost government loans if necessary to survive.
When times are tough, the first instinct is to stop spending altogether. This type of knee-jerk reaction is not necessarily the one that is best for your business. Before you cut out all spending or reduce staff through layoffs or furloughs, try to identify any inefficiencies that you have. Pinpoint the products that provide the highest profit and make production or distribution as efficient as possible. It may require you to automate certain procedures and this can reduce labor and inefficiency.
Identify your biggest customers and make sure that you keep your relationship with them front and center. Maintain contact and discuss how their needs have changed due to the pandemic and how you can help them make sure they are also thriving. You have to refocus your products and you may lose some smaller customers but making sure that your business is able to survive is the main concern at the moment.
Every business depends on its accounts receivable, account payable and inventory to operate. You have to have money coming in from your receivables which you can use to pay your accounts payable. You must maintain an adequate inventory to meet the needs of your customers to have accounts receivable. It is all interrelated and vital to your business's health. Consider options like offering a small discount for accounts paid quicker than normal. Take advantage of any discounts offered on accounts payable, but otherwise wait until the last possible moment to pay. Keep a tight rein on your inventory and record-keeping. You can't have a business without an accurate inventory.
Consult A CPA
Times are difficult and no one knows when the business climate will turn around but managing your business efficiently with a financial planning checklist in the upcoming post-pandemic world can be done. It helps to have a partner and Chandler & Knowles CPAs are a firm you can count on to help navigate the troubled financial waters ahead. Contact us to set up an appointment.