It is certain that this winter will be unlike any other winter we have experienced in recent times. With local and regional lockdowns already occurring and talk of not allowing students back from university for Christmas, Brexit still going ahead and continuing uncertainty around Covid-19, the next few months are looking rather bleak. Despite all this, there are several actions that you can take to help protect your business.
The most important point to remember as a business owner is that burying your head in the sand does not make a problem disappear. Doing nothing is NOT an option – you must take action.
First, block out half a day to work solely on your business. No distractions from customers, family, phones, or team members.
1. Brainstorm ideas
Consider four opportunities to re-invent your business. (If you’re not struggling, and your business won’t be too badly affected by additional lockdowns or worsening conditions, you might not need to do anything too drastic here)
- Innovate – Do something entirely new. It might not be as lucrative, it might not be as enjoyable, or what you are truly passionate about. But it will be revenue-generating. Someone I know started a morning routine accountability programme when her skin health business had to shut.
- Re-engineer – Consider using something you’ve already got to produce something different. Think of the gin distilleries who started making hand sanitisers to boost the supplies when their own demand declined as a result of the hospitality industry shutting.
- Adapt – How can you change the way you deliver your services or products? A physiotherapist friend of mine started delivering her classes and therapy sessions online rather than in person.
- Increase your revenue streams – Add a product or service that you haven’t previously offered. A wedding planning client of mine set up an additional service helping wedding industry business owners launch their business, helping them with marketing, website design and so on.
2. Look at your personal budget
If you can reduce your personal expenditure to reduce the pressure on your business, it will make running your business less stressful. Build out a spreadsheet or use one of the many personal budgeting apps out there. Make sure you consider both regular monthly outgoings as well as annual ones. Start by looking at your expenses as they are now, and then see what can be reduced. To assist with this, consider opening a free business bank account to monitor your expenditure. Remember to consider debt repayments as well.
Here’s a webinar I ran on personal budget planning…
3. Work out your business budget
Once you have completed your personal budget, you will know what you need to draw from the business. This should always be your starting point when you create your business budget. There are many ways to budget, but the most important thing to remember is that you need to consider debt repayments, asset purchases and tax liabilities, as well as the general operating expenses.
- Read more: How do I build a budget?
4. Set out your Key Performance Indicators (KPIs)
Next step is to ensure you have some Key Performance Indicators (KPIs) to monitor on an ongoing basis (we recommend monthly). Your budget will inform what those KPIs will be, for example:
- Reaching certain sales targets.
- Generating a minimum number of prospects each month.
- Have a number of customers visit your store.
These will vary depending on your industry and business. Choose the best business bank account for your company today, to monitor KPI’s.
5. Do a SWOT analysis
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses tend to focus on your internal situation whilst Opportunities and Threats consider the external situation. Think expansively and write down the following:
- Identify five strengths about your business – This could be having a loyal customer base or a profitable product or service.
- Identify five opportunities that you can work on – Think positive here! It could be new lines of revenue, new technology, cutting office costs etc.
- Identify five weaknesses within your business – This could be reduced turnover, poor cashflow, poor internal controls resulting in bad credit control or customer service.
- Identify five threats facing your business – This could be reduced footfall as a result of lockdowns, disruption to your supply chains, or a downturn in consumer spending.
Assess the likelihood of each threat, and the consequences if the risks are not mitigated. Pick two as your Critical Challenge that needs to be worked on ASAP. It might even be that you need to sell or liquidate part of your business – be honest with yourself here.
6. Create a Business Continuity Plan
Now you’ve assessed and analysed your position, you can put together a business continuity plan:
- Write down the Critical Challenges to your business in the next 6 months.
- Note down the key actions relating to your personal budget.
- Have a think about what will be needed to keep morale, engagement, communication and productivity maintained at a suitable level. Even if it is just you in your business, you need to ensure these elements are considered to protect you as a business owner.
- Confirm what re-invention is required.
- How are you going to adapt your marketing? Consider different social media platforms, networking, online groups, etc. Make sure it is within your budget.
- Do you need to tweak your sales targets to be more realistic? Do your sales systems need to change? Use your business budget to identify sales targets
- If you have a team, you may need to consider restructuring. With the Winter Economy Plan announced on 24 September, the Job Support Scheme may help – but will it be enough? Do you need to consolidate some roles by making staff redundant? Can you afford to utilise your team elsewhere?
- What actions can be taken to improve cash reserves in the business? Have you obtained all the coronavirus business support you are entitled to? The Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Schemes have both been extended as part of the Winter Economy Plan. If you haven’t already obtained a loan from either of these schemes, consider applying for one to boost your cash reserves. Or you may wish to use them to launch a new service or product, invest in the team and so on. You can always put it in a separate pot if you do not need it. The Self Employed Income Support Scheme has also been extended to help the self-employed – what can you do with these funds?
- Look at your operating costs – what can be cut? Can you negotiate a better deal with any of your suppliers? Can you reduce your repayments? Use your Business Budget to help you identify the key areas that need addressing. Utilise the HMRC payment plan that was announced to spread out your January 2021 Self Assessment liability over 11 months.
- Finally, look at all your processes and systems – what can you do to streamline and automate – work smarter, not harder? The more you can automate, the less time that is spent doing repetitive and mundane tasks – which either means lower staff costs, or more time for you as a business owner to focus on what really matters in the business.
The above are all actions I would recommend business owners take immediately to help protect their business over the coming months. I would also advocate a 12-month (minimum) forecast to ensure you are ready for and tax liabilities that have been deferred, loan repayments that may start, and also to give you visibility and clarity on the future. This can be done on a spreadsheet, but there are also some excellent forecasting tools out there to help streamline this process, and ensure the data is up-to-date and accurate. Futrli is the prediction and forecasting software that we use.
Informi readers can sign up for free and get the first three months of the paid version ‘Flow’ for free.
1. Go to Futrli
2. Register for free
3. “Upgrade to Pro” and use the code COVID_INFORMI at the checkout.
Finally, make sure you are kept up-to-date on all the latest announcements from the government, reach out in your communities or small business networks and ask for help, guidance, and support – if you have an accountant, get in touch with them to discuss how they can help you to continue weathering the storm. Stay positive, stay in control where you can, and see you on the other side!