One of the many challenges for businesses post lockdown is about being lean but not mean.
What am I trying to say?
I am talking about balancing cashflow and the affordability to resource with customer and employee satisfaction.
Many business owners have had staff on furlough and are trying to get the timing right in bringing those staff back to work, whilst others are debating how much temporary resource they might need and when.
So how does this impact on both Customer Satisfaction and Employee well-being?
Two examples I have seen this week
Customer satisfaction: I am currently going through a house purchase. Our buyer changed solicitor mid-way through the process as the firm had furloughed so many people, he couldn’t get the service he needed.
Employee well-being: A client of ours was telling us about her husband who is being asked to carry the work of his department of three, working twelve-hour days to keep up. The firm can then maximise their use of the furlough scheme.
In both these examples firms are clearly trying their best to manage cash to preserve their future. However, the outcome is not good for the business with the first example meaning the solicitor lost the work. In the second the employee, already drained after everything we have all gone through in the last few months but sadly due to worries about job security is expected to accept increased workload.
What can you do to get it right?
Plan, plan, plan
Of course, no-one knows what the future holds right now and what the recovery will look like, but you still need to try. Doing so will help to estimate the optimum time at which you will need more resource. My advice; –
1.Make your best estimate on what income will look like
2.Assess the staffing capacity you need to service this well
3.Understand the trigger points in advance on when you need to bring additional resource in to service customers and ensure employee well-being
Consider Capacity requirements
• If you have used the furlough scheme, take advantage of its flexible nature. Remember you can bring people back on any working pattern now so assess what is right for you. Consider is it more efficient to bring people back for one day and get everything done for the week ahead or is a few hours per day more appropriate.
• If you use temporary or outsourced resource, then talk to them. Make the situation collaborative and talk about what you need, try to be flexible to ensure they can perhaps top up with work from other sources.
Once you’ve looked at what income you might get, and the resource required then look at your cashflow. What does that mean for you as a business, do you need additional funding to get you through the next few months.
The balancing act
It is very hard being a business owner right now.
We are all trying to manage cashflow as best we can in uncertain times. A little bit of planning will ensure you can look after your employees, your client and your bank balance.
Be lean but don’t be mean.
Remember your swimming badges at school. My least favourite was the one where after you had already swum multiple lengths and dived for a brick you still had to swim a length in your pyjamas. I remember feeling tired, my swimming stroke wasn’t particularly strong and the weight of my wet pjs made the last bit pretty tough.
I think a lot of us feel like that now, having got through the last few months and fortunate to still have a business, we now must turn our attention to making it post-lockdown. We all feel a bit beaten up by it all so below are a few tips to get you energized and ready to tackle the post lockdown period.
We are all in a growth phase now as we rebound from this period, but this is different from when you started your business and grew from nothing. Now you can use everything you have learnt from the first time you did it and grow faster and more profitably.
My two key questions to consider;-
Who you want to sell to?
Is it the same people you sold to before or do you now better understand the profile of customer you want to work with? Think about the size of customer, the sector they are in, the location or even the number of decision makers you have to deal with.
What do you want to sell?
Do you know which of your products or services are the most profitable? Can you drop services you didn’t enjoy delivering, have you pivoted during lockdown and have great new offerings to get out there?
Do you know the maximum capacity you could deliver right now based on your existing cost base?
It’s important to understand this and compare it to what you are delivering and think you may be able to in the coming months.
If you realise you are currently over- capacity, then consider
-Use of the flexible nature of the Job retention Scheme from 1 July. Understanding what staff you need now is key and knowing your trigger points in terms of sales vs capacity, so you bring people back at the right time.
-Unfortunately, you may need to make redundancies now to preserve the long-term future of your business. If based on realistic sales this is necessary, then do not take too long making this decision.
If you are under capacity because business is going better than anticipated, then think about whether you really need to employ or are you better surrounding yourself with a network of good quality freelancers. The second option puts less pressure on fixed cots during what may be a volatile time.
In such an uncertain time there is no getting away from the fact you need to forecast your cash flow.
Factors to consider
Income – So hard to really know what will happen- will recovery be U or V shaped- who knows. Start with your best guess based on what you know now.
Costs – Ensure you build back in any costs which have been reduced during this period e.g. rent reductions, other premises related costs. You may also want to build in costs to help you re-build such as advertising or marketing.
Loan repayments– any loan repayment holidays may be about to expire so ensure you have considered these.
Tax deferrals – If you deferred Vat as part of the Vat deferral scheme ensure you rebuild in repaying this before 31 March 2021.
Sensitivity – Now you have done all this look at how sensitive you are to change – if sales were 10 or 20% lower than you have forecast what impact will that have on your cashflow
Financing – Now you know your position consider if you have the right financing in place.
So deep breath folks, we made it this far. You built your business before and all of this will help you to build faster and more profitably second time round. Plus the bonus is you can do all this planning in your pyjamas.
Now this is a story all about how
My life got flipped turned upside down
And I’d like to take a minute, just sit right there..
And I’ll tell you what life has been like for AJ Fleet and HF Financial Strategy over the last 10 weeks.
I remember very clearly how it really started for us and when our clients started to see the impact of COVID .
The first call from a client started with
“ I just wondered if you had any advice?”
“On what?” I asked
“Just in general on what we should do in our position.?”
He started his business back in August last year ,had a phenomenal start until COVID happened when his biggest client on a significant retainer was one of the first sectors to be impacted. Having got off to a flyer he was stopped in his tracks, nervous about what the future held , how to manage cashflow and the fact that he had just recruited two new members of staff.
Over the next few days what quickly followed was many calls like this;- one client losing two thirds of their revenue in the space of five days, others being impacted more gradually and then when lockdown came a number of clients in retail losing all their revenue .
That first period was tough, it was the initial shock for everyone and I’m talking the week before lockdown when I think things started to happen at a pace that took peoples breath away. By the time lockdown was announced we were all expecting it and I think mentally were ready for it. Andy and I spent a lot of time on the phone with our clients, talking them through options, forecasting cashflow but mostly listening to their worries and their plans to cope with the unimaginable. It was really hard, it was draining but I can tell you it was ruddy rewarding too.
As the government announcements came through we spent time thinking what it meant for our clients and trying to get it over to them in easy to understand formats. Their brains were shot with worries both professional and personal so we wanted to take some of that strain. I sat in front of the TV with pen and paper waiting for Rishi and the last time I did that I was learning the words to China in your Hand by T’Pau. We created flowcharts, easy to use tools and webinars to do our best to get them through this hideous time.
Business challenges aside some of our clients lost family members during this period and when you know someone behind just one of the deaths as they release the figures each day it reminds you how hard this time is for so many.
For us life went from 0 to 60 in the blink of an eye in professional terms and that was before the schools closed and we had to plan in to our day schooling our 5 and 8 year old boys. I don’t know if people think accountants are immune to recession or that we don’t worry when times like this come along. The truth is for us personally it was the same as for everyone else, we looked at our cashflow, we looked at how much of a buffer we had and we looked at how we could alter our personal spending.
We’ve found our own way during this time. Schooling is done in relays, I take the spelling and the fractions (god I love that part) and Andy takes the drumming and the Horrible Histories. We try and find time for exercise but our ability to converse at the end of some of these days has been limited.
We’ve had so many comments about our work during this time from clients and others. It’s made me realise I’m pretty calm in a crisis, that we explain everything really simply and Andy’s friendly and approachable nature shines from the rooftops. I like to think we had strong bonds with our clients already but having been through this together we will never forget it.
For me and Andy we’ve faced it head on and I’m so proud of how we have handled our clients and the schooling amidst all the personal worries about elderly relatives. There is a light at the end of this tunnel but fortunately for us it hasn’t been as dark as it has been for others.
In this 40 min video, learn:
- Immediate steps you should take as business owners
- An overview of government assistance (loans, grants, SSP, tax payment deferrals)
- The business interruption loan. Should you take it?
- What we know so far about provisions for the self employed.
Watch the video
We’ve collated a host of advice and resources related to Covid-19 and the financial support available to businesses and individuals. You can read all our latest guides and articles here.