Businesses are currently facing unprecedented times: COVID-19 and the resulting lockdown was something few would have predicted, nonetheless planned for. As such, many companies have had to adapt to cope with the coronavirus outbreak and the challenges posed by it.
However, when it comes to crises of any kind, it serves businesses well to know how to handle them. The key to being crisis-ready is forward-planning: identifying what measures you need to have in place, developing a contingency plan, and have the correct financial plan to allow you to weather any storm that may come your way.
We have put together our top tips for getting your business crisis-ready so that you can take on any obstacles that come your way and come out on the other side.
- Undertake careful business planning – including financial planning
- Know what costs are essential
- Consider different crisis scenarios
- Utilise technology
- Set aside rainy-day funds
1. Undertake careful business planning – including finance planning
Every business should have a plan behind it, and that plan should help it to keep track of its operations and future goals. However, a solid business plan can also help you to remain stable in times of hardship.
All businesses face times of economic downturn, so your business plan should be created to accommodate this. Part of this includes factoring in ‘worst-case scenarios’ for your business – so, if the worst were to happen, you know what actions need to be taken and what your business will do to survive.
Business plans encompass every part of your company – including marketing, operations, staff, and sales – so, by clearly defining the roles of each department and area, it can provide a blueprint of who should be taking responsibility for what. In times of emergency, referring back to this blueprint should help you to decide the right course of action while keeping your business values in mind.
A good business plan must also cover your finances, including cash flow forecasts, required investment, and future financial goals. It should detail what funding you need and at which stage for your business, including where you will source funds from if your business faces a dip in profit. With these financial forecasts in place, you can predict when you may need funding to boost your business and keep tabs on your business’s economic state. Even if an emergency should happen entirely out of the blue, financial planning can provide you with the information you need to apply for financial support or highlight how you can move money around to promote cash flow.
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2. Know what costs are essential
While a business plan can help you forecast the future of your company, it is equally as important to be aware of the current state of your business. This means observing your financial outgoings, whether that be related to staff wages, external services, supplies, or any other recurring payments.
When keeping track of these costs, you must know what each one is for, what they contribute to your business, and what return on investment they provide to you. This is not only good practice to preventing your business from wasting unnecessary funds but can also give you an insight into what costs are essential for your operations.
If your business does face a period of hardship, one of the first steps you may need to undertake to ease the situation is to reduce your expenses: by knowing what outgoings are vital to your business, you will be able to trim the fat when it comes to payments. Doing so will allow you to maintain better cash flow, which could be the key to keeping yourself afloat in a crisis.
3. Consider different crisis scenarios
While some situations can be entirely unpredictable, there are some that you can prepare for ahead of time. Scenarios like economic crashes, falls in sales numbers, and seasonal decreases can also generally be planned for by businesses, so make sure you spend time developing contingency plans that can be utilised should these scenarios become a reality.
Spend time brainstorming what crisis situations your business may face with your staff and identify the routes you would take to address each. Decide what support – financial and otherwise – you would need to have in place and what the actions for your workforce would be. Then, be sure to document these into watertight plans that are ready should they ever be needed.
Make sure your employees – particularly those in management positions – are aware of these crisis plans and are involved during the process. An effective crisis communications plan should alert stakeholders and staff when an emergency does take place, but bringing workers on board earlier can help them to take initiative and adapt as soon as a situation arises.
4. Utilise technology
One element that caught many businesses off-guard during the COVID-19 outbreak was the move to online trading following social distancing measures – particularly if they did not have the infrastructure in place to accommodate increasing virtual operations.
However, technology has allowed many businesses to overcome some of the worst impacts of the pandemic by allowing staff to continue to work from home, moving operations online, and providing customers with a way to place orders despite being unable to enter stores and offices. With the world becoming increasingly digitalised anyway, it makes sense for businesses to learn from this and utilise technology in their operations.
Technology covers a large variety of tools that could assist in an emergency situation: digitalisation of your contingency plans can allow staff easy access, social media and email can help you to get messaging out to customers and suppliers, and digital marketing can allow you to promote your business at the click of a button. On top of this, utilising technology can also prove very cost-effective for companies. Of course, if you don’t have the right infrastructure in place to accommodate increased digitalisation, you may need investment to do so, which growth finance can help you to achieve.
Once your business is in a fit online state, your operations can become much more flexible when you need them to be – such as in the case of a crisis.
5. Set aside rainy-day funds
The chances are that, in your personal finances, you have savings you can dip into when you need to, like if your car breaks down or another unexpected payment creeps up. Your business should be no different.
When planning the finances for your company, take into account any profit you are making and where this profit can be placed into your own business savings pot. You can contribute to this over time and in line with your business growth until you reach a point where you have a healthy fund set aside for emergencies.
This means that, should you face an unexpected dip in cash flow, your business has something to fall back on. Equally, should a crisis mean your business has to invest in new measures or equipment (such as those businesses receiving increased demand in the face of COVID-19), you have the funds ready. This is a sensible and easy way to cushion your business against any challenges – expected or otherwise – so that you can come out on the other side.
Get advice on how to prepare your business finance for crises
Having an extensive plan in place for when your business faces challenging times can be the difference to a company that succeeds and one that fails. There are plenty of things to consider when planning but, by taking precautionary steps, being aware of your financial situation, and developing contingency plans that cover all bases, you can equip yourself to deal with whatever comes your way.
If your business is facing such struggles, or if you would like advice on how to plan ahead in case it should in the future, our team of advisors are here to help. We can provide impartial guidance tailored to your business and advise the most suitable financial support for you.
Please call the team today for a free consultation or email [email protected].