I know many of you, like me, are experiencing a real downturn in sales these past few weeks and things don't look like they are going to improve soon.
So I thought id write about some ideas and hope you might use to help your business through this uncertain period.
Transparency: Being open and honest with your employees is key. Don't bury your head in the sand and pretend they don't know whats going on. You cant manage this period on your own. Talk to employees, business partners, and other business owners about the situation we're all in. Don't pretend everything will be all right. Our sales are down about 27% from this time last year. That's a concern. Being be open and transparent with the staff they know exactly the position we are in. Allow your staff to help keep the doors open. Nothing gets people to work together than that in times of crisis. Nows the time.
Discuss the Cash Position: Money is usually never discussed with employees or anyone for that matter. That has to change now. Work out your cash reserves (A). Work out how much you spend a month to keep the doors open (B). A divided by B will give you how many months you can survive if you closed the doors today. But you can change that. Look through every overhead cost and cut, cut, cut. If you don't need it to survive then stop buying it or cut it off. If you do need it then ring the supplier and say you need to negotiate my terms. The aim is to get one or all of: lower price, longer terms, delayed payments, and a lower minimum order quantity. You could easily add months to your zero income survivability.
Get Ready for the Recovery: I truly believe by Autumn we will be back to where we were. The places that will be successful are the ones that kept their talented employees employed. You need great talent and so keeping your best staff on the payroll is a must. Get all your financial management plans in place. Have a Financial Dashboard. This something you can look at daily and it will comprise several key indicators that tell you the state of your business. Once you cut all the necessary costs in your business and business is starting to get back to normal, always remember back to the middle of the crisis and how tough it was. Only add extra overheads costs if you know the business can truly sustain it. Try running the business with less staff first for a few months, you may be ok.
Build a War Fund: Every month put a % of sales into a separate bank account and call it a war fund. It's like a self-insurance policy. We started ours 3.5 years ago and could go without sales for 6 months. Our aim after this period is to build it to a point where we could go for 12 months. Recessions/shocks tend to happen every 10 years. So you have 10 years to build the fund up in preparation for the next big downturn event.
What you will have built is a great culture for your business and employees. Your employees now feel they are part of the survival and success of the business and they can benefit from the prosperity of the business as it recovers. They will understand what you do as a business owner and appreciate that managing costs at a micro-level are one the keys to business survival.
If anyone wants to discuss anything just reply and Ill help where I can.
I wish you the safest of journeys through this period of time. My thoughts are with you and your staff.