Sat, May 2, 2020
Read in 4 minutes
Miami Hub, Florida, USA Originally from Nuremberg, Germany
Covid-19 quickly evolved from an epidemic to a pandemic and eventually into a financial crisis. For a lot of people, especially millennials this is the first financial crisis in their work life. The good news is we will all get out of this so much stronger with whatever experience we are going through right now. Take it as a chance. We’re all in this together. Some are impacted more than others.
In this post I want to share some advice for all those who have their own business or are considering starting one. What are the actions to take right a way and in a few weeks or months?
Actions to take right away
Let your emotions out. Get out of the negative mood as fast as possible. Don’t play the victim. Switch over to problem solving. Yes, it’s an unfortunate situation but how can you get out of it? During times of crisis, it becomes clear, what mindset someone has. Remember: you’ve been through smaller crises, especially with your business. You certainly haven’t started at the very top.
Check for what (governmental) support/package you qualify. This can vary on a local basis. Also check, whether it’s actually necessary. For example cheap credits might be tempting, but do you really need to take one?
Take responsibility and see the crisis as a chance. Especially when you have people working for you. Walk the extra mile to make sure your business survives the crisis and be a role model to your employees. Figure it out and make it happen.
Actions to take within the next weeks or months
In order to be ready for the upcoming weeks and months, set up plans for cash flow, business strategy and sales marketing. Although you might not achieve all those goals, it is important to have some kind of plan. This not only helps you to reduce insecurities but also to get a structure in place in this constantly changing environment.
So what is behind a cash flow plan? To keep it short: Cash is King. What does this mean? Define what money you earn and what money you spend in real time. Do not mix it up with revenue. For example open invoices might be paid delayed. Check how much money you have in your account and compare it with your fixed costs for the next months. This tells you how many months your business can survive without additional cash. Draft different scenarios. What happens when cash is gone? What are your next steps? Be ahead of the game. Do not start thinking about it, when it’s already too late. You can optimize your cash flow through cost cutting (e.g. reduce the salary you pay out to yourself) and maximizing input (e.g. introduce new payment options to customers, special prices, additional products).
The next plan is about your business strategy. Focus on revenue generating measures. Soft topics like branding and quality might need to be put on hold depending on your kind of business. How can you achieve this? Check where your revenue comes from. Make an analysis based on the 80/20 Rule or also known as Pareto Principle. The principle shows that 20% of your products account for 80% of your revenue. Focus on the 20% during this crisis. Check whether you can sell the customers who are part of the 20% additional services.
What is needed right now? At the moment existing as well as potential customers need support in for example home schooling, setting up online shops or delivery services. Money did not just disappear but it’s being spent on different or new products and services. Be innovative.
Next comes the marketing and sales plan. Based on the topics we just discussed, you might need to add new products or a new customer group. This comes along with a new or extended marketing and sales set up. You for example need to add further sales channels. Facing the current pandemic, online business becomes more relevant than ever. Even for typical offline businesses, a proper online set up should be considered. It is important that you continue to build a relationship with your customers and be present. This could be as easy as setting up or updating your social media channels. Collect for example e-mail addresses for your distribution list. It should not only include existing customers but also potential ones. Such a list can be helpful when you add new services and want to promote them, whether it is during this crisis or afterwards.
Eventually, it is important that it is you who manages the crisis and not the other way round. Do not spend too much time on drafting your plans. Just go for it, try out different measures and adjust plans on the go. It is an extreme situation, which comes along with many ups and downs. Rest assured that you will come out of it stronger and wiser. Most likely this will not be our last crisis and we certainly will be prepared better for the next one.