By Steve Earle, President – Bauld Insurance Managing Your Business Through a Recession
To state the obvious, what a crazy time this is! The Global COVID-19 Pandemic has pushed our economy into a rapid state of decline. In March, we went from questioning to what extent the virus would have on our lives, into a shuttered state of social distancing. This has had a profound impact on everyone and many businesses – in our community, nation, and world.
Lives are at stake and so our governments are implementing wide-sweeping health directives to control the spread and impact of this Novel Coronavirus. With this, many businesses have been ordered to shut down to limit person-to-person contact. And now, we are heading into a period of recession. How long this will last no one knows. As a business owner, like all business owners, I’m grappling with how best to weather this economic downturn. It is an anxious and stressful time. The only thing any business owner, or anyone for that matter, can do is control what can be controlled. So, I wanted to share a few things business owners in our community could consider to make it through these challenging times and hopefully emerging for brighter days ahead.
Take a Close Look at Your Financials. Forecasting your sales and revenue is critical. You may have prepared annual or quarterly revenue forecasts. In times like this, I suggest closely monitoring your revenue trend and forecasts every week. What’s the percentage change week over week. If you spot a trend, take action. If you don’t have a Cash Flow analysis you need this more than ever. As part of this effort make realistic assumptions of every piece of financial data – Sales, Accounts Receivable, Expenses and more. Knowing this information will guide your decisions as a business owner helping you determine levers you need to pull to weather the storm.
Watch Your Debt. During times of economic crisis, you can very quickly go deep into your line of credit and hit a wall. Take a close look at your debt burdens and keep your bank informed. Ask your banker if you can get a break on interest or payment deferrals. Banks have a vested interest in your business‘s survival, so if you have strong business fundamentals, they will work with you to ensure you return to profitability in the future. The Government of Canada is also launching loan options to support small businesses. Don’t wait, investigate these options and take advantage of them as soon as possible.
Ramp Up Your Team Communications. Now, perhaps more than ever, you need to have open lines of communication with your staff. Keep your staff well informed about the health of the business. If your business is facing financial challenges, be open and honest with your staff. Hopefully, you can weather the downturn without cutting back on your staff level. I know this may not be an option for many businesses. For those businesses forced to cut costs, solicit feedback from your staff and hear what ideas they can offer to help the business get through these tough times.
Keep Driving Sales & Marketing. Continuing sales and marketing seems like a crazy proposition at a time like this. If you are in a business with a sales focus, I would encourage you to work remotely and continue filling the funnel. You may think it’s not a great time to be “marketing”, but you should work harder than ever to keep your existing customers informed while prospecting for new ones. If you do this well, you can gain ground on your competitors and reap the rewards when sunnier times return.
Make the Most of Any Downtime. Use downtime wisely and strive to look at the positives. Consider using this time productively by getting those jobs done that you never seem to get finished. Focus on enhancing or launching a new product or service, invest time in R&D, improve a process you know needs fixing, paint the walls, or learn a new skill. Better times will return, so make the most of the situation.
As a local business owner that has many local business owners for clients, I know we are in this together. While the current economic outlook looks bleak, hopefully, the downturn will be short-lived. While most of us will face some tough times in the coming months, if we make smart decisions and stay positive, we can emerge stronger than ever before.
President & Owner, Bauld Insurance