SURVIVING THE COVID SHOCK - FOR BUSINESSES

You probably have all the consequences of the coronavirus on your business in the last few months. Your profits collapsed, or worse, the company is now shut down during the shutdown. It's a full-blown, pandemic-fuelled epidemic, with macroeconomic indices. What do you have to do?
The solution now more than ever is business planning, which you might call your emergency plan, contingency plan, disaster plan or whatever right now.
If you're looking for a place to start, I suggest concentrating on managing your cash flow effectively. You will have to take a step back from there and look at the larger picture of what makes up your business strategy. Starting or revisiting this phase in the midst of a crisis can feel very odd, but it is the best way to ensure that you make good choices that will get you through chaos while helping you to succeed once things calm down.
A strategic strategy that links the dots
Changing inside or outside your company doesn't remove the need for planning, in reality change is when you really need business planning. Specifically, if you have an ongoing revenue forecast and cost budgets associated with that forecast, then you have immediate visibility to make sudden change fast changes.
Getting accurate forecasts connects the dots between revenue, expenditures and costs to give you a comprehensive image of your financials. This simple line map, for example, originates from an existing business plan and shows the reality of a business in a crisis state.
It shows how the real (in blue) revenues were above the (in green) estimate before the sudden drop when the crisis struck. And from there an updated (in red) revenue projection reveals the changes made under these new circumstances.
Crisis planning begins by revising your forecast on the basis of a significant decrease in sales and market conditions.
How do your sales figures look in a crisis?
Here's the harsh reality of what planning looks like in crisis when you see actual numbers, from the chart above. Sales are collapsing and your numbers look as follows:
The impact of Coronavirus is a significant decrease in current sales.
Even if your sales plan for this year looked like the following:
Your original sales projections based on sales in recent years and expected increases because of increased efficiency.
When you are past the shell shock of these drastic changes, for the next few months you have to review your projected sales:
Your overhauled sales plan
in about 2 minutes, this gives you an idea of the impact of the crisis and how it affects you (all these things are represented in a line chart above ... produced from these numbers).
This is only highlights. It requires an entire plan.
These illustrations provide you with a realistic view of the situation and start your adaptations. You must get into your business plan, which you will find examples at the end of this post. You will need to dive into the core financial sheets The perfect situation is, of course, that you have a plan, that you actively review and refresh.
If you don't, now's the ideal time to plan and predict business. Although this may seem daunting, at this stage you don't need a complete formal business plan. Start the quick , easy-to-use business plan instead to help you plan your business and finance in the coming months. But if that feels at present unattainable, at least you have to make a financial forecast.
We have a number of easily available resources, templates and articles throughout Bplan in order to help you get started.
See the business plan guide for a full list and read the financial details including:
Key Financial Plan Elements
How to Predict Sales
How to generate profit and loss
Cash Flow Prediction
Construction of your account
The gap between cash and income.
Also for your crisis plan, make sure you know how quickly your cash reserves are used, and how long you have to run out of cash. You know your burn rate and runway.
In addition, we have a list of COVID 19 resources available to assist you in managing your business, applying for loans and understanding cash flow issues during this crisis.
Adjust your business plan to crisis
You don't have to tell this article that you have to cut costs. You already knew this and if you want to jump to our solution for case studies, click here. However, here are some tips, if you have taken some steps to reduce costs already and you are not sure what else you can do.
Before cutting the payroll consider carefully
Our company experienced a major recession in 2008-2009 without leaving anyone. Our CEO Sabrina Parsons has closely monitored and reduced other expenses rather than the people 's plan and plan vs. actual indicators. She has pointed out that losing people who are trained, experienced, loyal is expensive and short-sighted, particularly when you will have to face all the rehabilitation and training costs again in a few months ' time, provided it gets better.
In addition, as I write this, the federal and local governments develop safety networks and incentives to reward companies that don't allow employees to leave. The best options at this time are Economic Injury Disaster Loans and Payroll Loans, both of which are great ways of maintaining costs and extending the cash path.
Look at benefits linked to payroll before you look at letting people go, as others are easier to cut than others. Obviously, you don't want to reduce your healthcare, but you may have some learning, career or retirement programmes, without hurting your people long-term.
Certain options to consider when reducing wages
And if worse is worse, before you let people go, you still have options:
Hiring freeze: it can cause some pain, but it helps to ensure that your current staff is maintained.
Cutting your executive salaries: your executive team and your key executives is generally closer to the business, more in line with the values behind it, and more able than regular files to understand the need. Frankly, a temporary cut is easier for higher wages than for lower pay, who live closer to the edge.
Reduce all pay by 20%: Share the pain in equal measure. It's a crisis that most people can comprehend. Particularly when such a measure saves people from redundancies and preserves jobs after the crisis is over.
Layoffs: Unfortunately, sometimes this must occur in the real world. You must ensure that you leave people behind, not profits, to preserve corporate survival. No profits are included in our business plan, reviewed for this crisis. We just try to reduce losses and keep our employees' livelihoods.
Some costs are connected to sales and are reduced
Many firms automatedly reduce some expenditure, called "no-discretionary" expenditure, as sales decline. For example , companies selling physical products by stores often have obligatory co-promotion costs related to retail sales. When they don't have so many trips, limo companies and transport companies save on gas. This is perhaps also a factor for your company, look for it and take it into account.
Comprehensive marketing costs review
Use common sense and trust your instincts, as marketing can continue for most companies even in a serious downturn. You can even focus your marketing strategy around the crisis and search for new target markets or use cases to promote your business. However, not all marketing is the same, some programmes are more useful than others, and certain programmes are easy to cut down and live without before the crisis ends.
Corporate planning ought not to be complex. With a simple all-in-one platform, design, fund and grow your business. Get LivePlan. Get LivePlan.
Our business plan sample crisis
I include the tablets for the business plan of our sample case and wish to highlight certain specifics to bear them in mind to illustrate the crisis plan.
Highlights
During the course of the crisis, the revised crisis plan does no good for the company. It reduces loss by using intelligent cuts instead. If the crisis continues more than a couple of months, more plan reviews and longer-term measures will be required.
According to this plan, nobody will lose their jobs in the short term. We keep people because it will cost them money later to hire them or substitute them.
Detailed financial projections
These are telephone lists and the data used in the illustrations above for those who are curious. (I couldn't resist adding that in LivePlan this information would have been so much easier, but I want to maintain that information broadly, not in product-specific terms.)
Pre-crisis crisis
And this shows the immediate perspective with decreased sales:
Interim Crisis Plan
It manages to cut losses without reducing the salary, reducing discretionary and marketing costs. It does not want to stay profitable and reduces short-term losses instead.
Adjusted Crisis Plan
You are not still out of the woods, but starting with these adjustments and taking into account your cash flow management needs, you will be able to adjust yourself to yourself in order to plan more carefully.