This is a stressful time for us all and particularly every business owner throughout New Zealand most of whom have no or very low sales coming in, still have overheads going out and no certainty as to how long this will last nor what will happen after the lockdown period ends.
As your trusted business advisor, we provided a free webinar to help you through this period and put a good plan in place to maintain your business continuity.
This latest blog post is an excerpt of the key messages from this presentation. There is also a link at the end of this post to view the full recording of this webinar.
Your Resilience
Mindset and the way you perceive the world around you is all a matter of choice so before we start looking at your business we need to start with you and how you are going to approach the challenges ahead.
As a business owner and leader we need to make sure we have above-the-line thinking in order to be successful and the ‘Victor’. We will not be able to achieve what we need if we allow ourselves to succumb to below-the-line thinking and become the ‘Victim’.
As well as maintaining a positive mindset we also need to consider our identity. In other words, who we want to Be during this time of uncertainty.
According to the ‘BE DO HAVE’ principle, there are two ways we can approach any challenge:
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When I HAVE got through this difficult time, I will be able to make a DO the things I need like make a plan to get through this and talk to my team so that I can BE a great leader for my business and my staff.
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In order to BE a great leader for my business there are some things I need to DO like update my plan and get proactive with my team and my customers during this time of crises so that I will HAVE a successful business and be a great leader for my team.
There are also several other actions you can take to help improve your resilience, as the business owner, right now. Your wellbeing is critical so here are a few quick tips for helping to get you through this:
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Stay connected
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Use Xero’s Assistant Programme (XAP) service
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Make time for your family – family always comes first!
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Take time to review your personal budget
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Look at your personal asset planning
Contact us to find out more about the ‘BE DO HAVE’ principle.
Your Team’s Resilience
In order to preserve your business you need to consider your team and what you can do to retain your staff through this period. Think about continuity of work for your team including your remote office systems such as Office365 Teams and other online sharing systems.
The government has provided a raft of support packages to help businesses remain viable through this lockdown period and hopefully retain as many of their existing staff as possible too. However, if you do have to make any changes then make sure your staff now what support is available.
Now is also a good time to ensure you have clear policies in place for dealing with Covid-19.
Look After Your Customers
The support you offer your customers now will impact the support your customers give you in return in future. If you are still operating (albeit remotely) then make sure you communicate this clearly to your customers as well as how they can continue to work with you safely.
Now is a good time to review your Terms of Trade and Contracts to ensure these work for you through these changing times. Make sure your customers are paying you on time and be clear about how you can ensure this happens.
Consider Your Suppliers
These are business owners like yourself who are also struggling with trying to work out how they can maintain their business through this period. Consider this impact on them too and make sure you communicate clearly and as early as possible if you need to make any changes to your current arrangements.
Some things you can consider are:
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Payment arrangements/negotiations to help with cashflow management
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Purchasing policies
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Returning slow moving stock
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Reviewing all contracts
Look at Your Cash Conversion Cycle
In difficult times such as these you need to make a plan to shorten your cash conversion cycle. This is an important process in your Business Continuity Plan.
Using the data from your most recent management accounts we can work out the above numbers to calculate your current cash conversion cycle. From there we can discuss with you how we can work together to shorten the cycle and free up more cash.
For example, if you have debtors of $20,000 and your annual turnover is $300,000, a 10 day reduction in your cash conversion cycle is worth $8,219.
Contact us to find out more about the ‘Cash Conversion Cycle’ or for a copy of the diagram used to present this process in our webinar.
Your Business 101 Cycle
There’s a big difference between profit and cash – profit is what you pay tax on and cash is the oxygen on which your business runs.
What’s important here is while you are improving your cash conversion cycle, you make plans to maximise your profit and at the same time finance your business correctly.
Moving Beyond Lockdown
Let’s not forget that this period of Alert Level 4 will come to an end so now is also a good time to be planning for a better future and thinking about ways that you can make your business successful again including:
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Increase client retention rate
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Increase leads generated
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Increase prospect conversion
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Increase transaction value
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Increase transaction frequency
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Reduce cost of sales
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Reduce overheads
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Please contact us if you would like help with your Business Continuity Plan.