Why not use the CV19 lockdown time to work on your business?
Updated: Apr 4
Here we are at the end of the second week of lockdown due to the CV19 virus. Your business is battened down, staff furloughed, and you are waiting for the government pay-outs. Unless you are in the front line, you probably have time on your hands to work on your business. The world will be a different place when the lock down starts to be removed. People will have got used to working from home. People will be apprehensive about not being socially distanced, until a vaccine comes on-line. How suppliers and clients have behaved during the pandemic will change your relationships. The government will be planning on replenishing their coffers having made pay-outs. So where is a good place to start?
The financial accounts of a business are a single source of information which can signpost you to what you need to do next. You may have a gut feelings, and specialist consultants will tell you that if you address their specialism, everything will fall into place. But reality is not like that, as we are currently witnessing in the extreme. The beauty of the management accounts is that they should be “current”. They allow you to run scenarios before you take action. Building a financial model of what your business will look like, as the lock downs are lifted, is vital if you are to make headway after this interruption.
If you do not have a set of management accounts where should you start?
Step 1 - income
The first place is to look at your existing customer base which generates the your income. Ask yourself, how relevant these will be in the future? Will they exist? Who are likely to be the most attractive future customers? Take account of how the pandemic will change people’s routines. Who do you want to work with and who did not share the same values as yourself during the crisis? Going forward establish a coding system for clients, or projects, so you can monitor the gross profit in enough detail. This will enable you to make informed decisions about the work you decide to deliver.
Step 2 - marketing
Having identified the markets that you want to grow, work out a marketing plan to get to get to them. If the market is different to your existing market, changes will have to be made. During the lock down, you can begin to make enquires about your proposed marketing strategy and prepare for when activity resumes. It’s too late leaving it to when activity resumes, someone will already be ahead of you and building relationships with your new customer base..
Step 3 - overheads
The overhead functions, accounts, HR, IT, safety, QA can all be looked at. Can you introduce efficiencies? Is now an opportune time to upgrade an IT system? The existing organisation chart will not be suitable for the business when it restarts. It’s surprising how much things will have changed in a month or so. For what ever reason, individuals may want to change how they work and requests for working from home may come flooding in. One thing is certain, the restart will not be as fast as the close-down. Supply chains will require replenishing and other relationships will have moved on. Setting up a coding system for costs associated with each of the overhead functions, will allow you to monitor them as a percentage of gross profit, The monitoring will allow you to make informed decisions about managing them in the future and check that any investment which has been made is paying off.
Step 4 - Keeping on track
Once the above is in place and you have prepared a forecast, reviews should be implemented at appropriate intervals and action taken to address the issues identified. Take the opportunity to work on your business in the lockdown. You are unlikely to get another enforced stoppage like this. Take time to reflect on, what you have and what you can change. A thorough review of the set-up of the management accounts will act as the perfect focus to signpost actions.
If you would like to discuss setting up a robust financial plan and review process, please contact me to see if I can help you. Peter.Searle@ba4cs.co.uk
More about the author https://www.linkedin.com/in/peter-searle-a75a993/