Planning business finances post Covid 19 will be critical for success for ambitious and thriving companies.
Those plans will also have to take into account any possible return to a lockdown situation even if it’s just town, city or county wide.
Here at Purple Lime we are already working with our clients to support them in this as we slowly move away from the most economically challenging period in more than a generation.
According to a poll by the CBI, 1 in 6 of almost 500 businesses reported that they had launched a new product or service due to the pandemic. However, the majority of these were related to producing hand sanitiser or procuring PPE – a possible short term pivot.
The report also found that 8% of the firms surveyed had pivoted in their businesses, and created a new product or service too.
With regards to many of the other changes, such as working from home, and moving to online solutions, the same survey found that almost 40% of firms intend to hold onto the changes they have made during lockdown.
All of these changes will obviously impact on business finance and planning.
How successful has your financial planning been during lockdown?
Successful companies will have:
- Focussed on the wellbeing of employees –ensuring that employees are secure, safe and well looked after, as much as possible during the Covid-19 situation.
- Been able to take decisions very quickly –look where your business is currently and being able to make change effectively and at speed to remain productive. Know what is being spent and work out what can be cut. Remove or reduce things where possible without affecting the business, and its sustainable operations. This could include things like excess building rent.
- Considered cashflow –knowing where every penny is spent, managing costs very closely and ensuring the business has enough cash being generated to keep going smoothly is vital. A business could be owed many thousands of pounds, however not having that within the business means a business will soon grind to a halt. Cashflow truly is king. Also strong business owners will have a credit control process in place to ensure that invoices are paid in a timely manner.
- Increased communication at every level in the organisation –this is critical to being able to focus on the details and make rapid decisions as well as getting ‘buy-in’ from team members.
- Been flexible in terms of expectations and planning –been ready to adapt; the markets are changing rapidly. Have a plan, but know how you can make adaptations if needed.
- Been more open to working from home and investing in smarter IT support and online opportunities – think completely different about the business and how it operates, talking to your financial advisors along the way. An increase in businesses moving from an office structure to more home-based working is likely to happen. Regardless, most businesses will have a much more flexible attitude to working from home and this may include supporting staff with kit and IT to work from home permanently.
Here are just a few tips around remaining post lockdown:
- Re-organise the business in line with the new demand levels – build a timeline to rebuild business.
- Looking carefully at effective forecasting and planning – Profit and loss, balance sheet, cash-flow
- If you have pivoted in your business and taken on new ideas, how will that affect your plan?
- Revamp your budget to match any new needs
- Monitor cash flow; be able to predict as much as possible, so you can intervene when needed.
- Maintain a strict discipline on working capital.
- Maintain regular contact with suppliers and identify any potential risks to your supply chain.
- Assess financial and operation risks and rectify quickly.
- Monitor direct cost escalations and their impact on overall margins, and renegotiate new terms and conditions where possible.
- Be aware of your suppliers and where they source materials – you may need to look for alternatives.
- Most importantly, remain agile enough with plans to be able to react to unexpected problems.
If you need any help with financial planning please get in touch by emailing admin@purplelime.uk.com