This is a question lingering in so many rooms right now.
After we get through this crises, how will business be? Do I commence operations with all of my staff? Will my revenue be as much as it was? Half of what it was? A quarter of what it was?
You must begin by performing the following: 1. Reviewing your current business model framework.
Financial Framework
Determine what you are doing well and what you need to enhance or change.
What costs can I eliminate or reduce?
Business finances are now being reviewed out of necessity. That one area of the business that was inadvertently overlooked because it was not a priority at the time is now being heavily reviewed and scrutinized. This was often overlooked because generated earnings were enough to cover all business expenses so there was no need to perform a review. It's no longer business as usual! Now we are reviewing to see how these limited funds should be allocated.
While reviewing your finances, take it a step further - do not look at the funds on your
bank account only.
Consider how the funds were generated and the associated costs. Are your price points appropriate? Are your costs points practical when considering quality of the item being sold?
For example: Company A sells Product A only at a cost of $300. All costs (purchase price, freight, customs duties etc. ) related to getting this Product to me and ready to sell on a per unit basis totals $150. Therefore, for every product I sell, I’m actually profiting $150 not considering other indirect costs like rent, utilities, salaries etc.
Now, you need to sit down and consider how many of these you will have to sell in order to cover your direct and indirect expenses.
Based on this exercise, you will be able to see what you can afford from what you cannot.
Operational Framework
It's time to look at your current operational structure and identify what would have been feasible during this time for you to generate income (if your business is closed) or maximize income (if you operate an essential business).
Many service based businesses have resorted to #zoom, #googlehangouts in an effort to
continue generating income. Many retailers have resorted to take out and or delivery
services to generate income.
In a time like now, something that may have proven to be viable for Product A (above) was a delivery service if it represents an item that would be in demand. This is why it’s also important to ensure that you are not only selling items that represents people’s wants. You must ensure that you have some items that people need regardless of the economic climate.
2. Ensure that you are setting aside savings for investment purposes.
Alternative sources of income is absolutely necessary too. Build up your investment income. If this is your only business, you could have funneled funds into a savings with the intention to invest.
Stocks and bonds are cool! Real estate is great! While both of the above have been affected by this crisis, tenants still have to pay rent. While you may have some who are unable to, you will have others who want to stay on top of those bills. Therefore, when you are targeting tenants, you have to consider all of these factors because it makes a difference.
A saving grace for some landlords are the deferral of loan payments by some of the main lending institutions. As a landlord, you are still incurring interest but it helps with your cash flow during this time. You can prioritize and have one less worry.
3. You must have a renewed mindset
Mindset is important. I always emphasize the importance of not only focusing on the problem but also considering some solutions. Being so consumed by the problem wastes time. It depletes energy and resources. It’s nonsensical. A lot of times, we are cornered because things didn’t go as planned or perhaps there was no plan and something happened. But you figured it out! Some problems take more time than others to figure it but spend the time. Do not make excuses and begin to panic and worry.
Building wealth must be a goal of yours. You cannot be in business to simply own a business and be a business owner. Think about your children and leaving a legacy that they can build upon. Therefore, you must not only focus on short-term goals. You must build out those long-term goals because they dictate the actions that you will take now to get there.
4. You must have a strategic plan
Strategic planning is necessary. You cannot just make a short-term plan today and not consider your long-term goals. If they do not work in harmony then you are sacrificing something here.
5. Maintain proper books and records
Maintaining proper records and remaining up to date with your obligations is a priority. Should you fall on hard times, you can seek financial assistance and there is nothing more relieving when you can prove that you are on top of your finances. It saves time, headaches, and money.
6. Develop a system
Develop a system that works for your business and its unique needs. Every business is different and using a generic model will only result in misfits so tailor your model to your industry “ideal”.
Remain abreast of changes in your industry so that you can accordingly adapt and enhance, where appropriate.
Prioritize efficiency, quality, convenience.
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