The current pandemic has caused many small businesses to diversify or pause their usual business operations in order to keep afloat. If you are a business owner that is looking to improve your business finances during this uncertain time, here are our tips to help you manage your cash.
Your first port of call is to look at every area of your business and see if you are able to reduce your expenses in anyway. Can you find cheaper suppliers, equipment and services? Better still, can you renegotiate with your existing suppliers? You may be able to lengthen your payment terms with vendors and suppliers which will enable you to keep cash in house while still collecting revenue. If you do decide to go down this route, make sure you spell out the benefits that the supplier/vendor will reap from your proposition.
Cash flow forecasting
Financial forecasting is a valuable exercise for all businesses, particularly small businesses, where a healthy flow of cash is vital. A short term cash flow forecast that includes a comprehensive list of all your sales, costs and cash transactions will help you make important, realistic decisions about your business particularly if you are diversifying or offering a new service in the short term to help meet customer demands. It will also help you plan for change. Remember, a forecast is not set in stone, there may be customers who fail to pay, sales that don’t materialise, or unexpected expenses that show up on your doorstep. So, continue to monitor and adjust your forecast as you go along to keep things as accurate as possible.
Recover outstanding payments
Late payments can have a big effect on your business. If you are unable to pay your staff and suppliers, you will suffer the consequences. Although it is difficult to ask for money from business colleagues who may also be struggling at the moment, it’s important to do so. Knowing where you stand, will mean that you can make provision for late payments in your cash flow forecasting. It is also a reminder of how important it is to set out clear terms about when payment is due (and terms for overdue payments) when we make sales agreements in the first place.
Consider consolidating debt
When looking at improving your business finances, it is important to look at any current business debt you have. It may be advantageous to consolidate debt to a more attractive lending platform. It’s often simpler and more economical to refinance your debt into a single payment. It’s important to do your research though and compare different platforms before you commit.
A little marketing will go a long way
It is likely that during this pandemic that you have had to diversify your business in some way, or maybe even take a short a pause in proceedings. Although you may not be operating to full capacity or marketing the same products and services, it’s still important to remain visible as a brand. Empathising with your customers, adapting to their needs and communicating with them regularly will go a long way during what is a very uncertain time for businesses.
Keeping in touch with your existing customers, even if they’re not looking to buy anything right now, is important. Reassure them that you are there for them if needed so they will be eager to return to you when they can. Customer loyalty will go a long way during tough times. Listen to customer needs – are you able to offer anything that will make their lives easier? Engage with your customers, spend this time working on your long-term marketing effort. While the coming months may raise new challenges for businesses, remember, things will eventually return to normal and your customers will want to re-engage with you and your brand again – so make sure you protect it.
We are always happy to chat through any questions you have and offer our advice. Please don’t hesitate to contact us, we are here to support you.