As non-essential businesses are back and businesses such as pubs, restaurants and hairdressers plan to open from Saturday the 4th July in England, it will be a great relief to many business owners and their employees to "get back to work" after the lengthy 15 weeks in lock-down.
It is fantastic that many can return to the workplace and be involved day to day in what they love doing, serving and supplying customers old and new and this will likely have a positive boost to all the service and supply companies too.
However there has never been a more important time, than now, when you need to "Know your numbers".
With the hype and euphoria of returning, don't rush out and utilise your cash reserves, please ensure you do not over commit and overspend and leave nothing in the till. Spread and plan your purchases frugally and do check and review how trading will pan out over the first few weeks and months before you commit any large amounts, make big changes and use up your financial reserves.
I envisage it will be a bumpy ride. We may see a large influx of business and pent up demand in the short term and we will all be buoyed at first. But then we may experience a drop off in business after a couple of weeks after opening, due to a slow down in demand and the relisation and possible effect of localised lock-downs caused by new spikes of COVID19 clusters cases across regions in the UK. However, this is a real unknown for now.
However, over time hopefully things will settle down and we will settle into that New Normal. But until we get a vaccine or achieve heard immunity and get the all clear, many consumers and customers will stay away and restrict their spending. There is also dark clouds looming on the horizon with a predicted large number of redundancies across industries, as businesses cut their cloth to suit the New Normal and also as the UK Government business support tails off.
Trading for the next 12 months could be 60-80% at best of what it was like prior to Covid19.
So, remember, "Cash is King!" keep something in reserve and continue to build yourself a war chest or rainy-day fund.
If you Fail to Plan, you are Preparing to Fail, Benjamin Franklin.
It is worth carrying out two or three different business trading and cash-flow forecast scenarios. Plan out your business costs, expenditure and predicted income for trading levels at say 50%, 75% and 85% and the estimated impact to you and your business over a set time period, remember to apply seasonality too.
By calculating revenue versus resources, along with cash in and cash out, you may decide you do not need all your employees at once and therefore could you stagger shifts, have some staff work part time, rotate shifts. Therefore do ensure you utilise the UK CJRS furlough scheme as a flexible staffing option for at least July through to the end of October.
An example cash-flow is downloadable in pdf as below and do feel free to use as an aide-memoire.
However, if you need to delve into and work "ON" your business predicted finances and working capital needs further, I've a full template with notes page in Excel. If you private message me, I will happily forward to you.
Note: It is worth getting external advice from either your accountant, bookkeeper or business adviser. As having another pair of eye's run through your predictions and forecast will help you sense check and have a stronger plan.
If you need to apply for additional funding the chances are you will need to present a cash-flow forecast along with a business resilience/recovery plan too, however it's worth knowing how working capital will be utilised and it's good practice and may help you sleep at night too!
Most business do not fail because they are poor businesses, they just run out of cash, (65% according to Xero.com) due to either over trading, over borrowing or being caught by bad debts. Therefore please ensure your business does not add to these statistics and take the time to plan accordingly.
Please contact me for a free initial consultation (with no obligation to take anything forward).
Or if you prefer to have a chat over a coffee, virtual or face to face, please do just shout.
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