The nation is looking forward to the economy fully opening up after a tough winter, but businesses need to adopt a financial strategy to smooth the post-lockdown transition.
The easing of restrictions should act as a warning signal to any business which has taken advantage of Government-backed financial support over the past 12 months.
Can your business survive on its own two feet when the loans run out and staff return from furlough?
“Every business leader has had to show agility over the coronavirus crisis and now things are about to change again,” says Emma Roberts from One Click Accountant.
“The end of lockdown is not a return to normal, as the Government’s loans and furlough scheme have created a false financial picture. Producing a sound financial plan is crucial if you want your business to exit the lockdown in a robust and healthy state.”
Seven-step Exit Strategy
To help you, the experts at One Click Accountant have compiled a list of seven steps to help businesses prepare for the next few months:
1. Information overload
Without the right financial information you cannot make informed strategic decisions. Gather everything you can, including cash flow forecasts, profit and loss budgets, balance sheets and details of funding deadlines.
Now that you are armed with all your financial data, drill down on what is happening across your business. Analyse the flow of work to spot any trends, while trying to identify potential risks and opportunities.
If the Covid-19 pandemic has taught us anything, it’s that businesses can never have enough cash in the bank or in reserves.
Set out a plan to ensure that profits should be kept in the business to deal with any future disruption to trading.
This will be one of the biggest challenges for businesses who have a large number of people on furlough.
Consider the necessary staffing levels needed to handle an upturn in business, and put a plan in place to stagger the return of furloughed staff members.
5. Supply chain
If you suddenly get a flurry of new business, will your supply chain be able to cope? Are any of your suppliers in financial difficulty?
Review the current situation and predict potential outcomes to avoid potential order backlogs.
Use social media, emails and phone calls to keep in contact with your past and present clients. Make them feel valued so there is a good chance that they will stay with you for the long term.
Don’t forget your internal communications, you will need to bring all your staff with you if you are to survive any bumps in the road.
Set clear expectations and keep them informed about where the business is going.
Reviewing your finances is not just about cost cutting and pricing, it should also highlight any opportunities to gain new business.
Identify what services are the most popular, and spot any weaknesses in the competition so you can seize the initiative.
“We understand that setting out a financial strategy can seem a daunting task, but every business should be taking a long hard look at itself,” concludes Emma.
“Businesses have done well to survive the past 12 months, don’t throw away all your good work now that we are exiting lockdown.”
If you would like some help to strengthen your financial strategy: