What it looks like on the ground for business-owners trying to reemerge from COVID-19
by Larry ChesterMr. Chester is founder and president of CFO Simplified, a corporate advisory company, working with small to mid-sized businesses in cash flow improvement, strengthening internal controls, improving profitability, and clarifying financial reporting. Visit here for more details.
The economy is “reopening.” And you need to have a plan. Even if you haven’t closed, your business, or the economy it operates in, has changed. So, it’s probably a good time to address those changes officially.
The current business environment can turn even the strongest stomach. There are many issues that need to be addressed. Having a checklist makes much of that easier to handle. Also, be sure to reach out for additional help from specialists to assist in areas that are not your area of expertise. Talking to an employment attorney, banker, commercial realtor, marketing expert, and even a CFO can make sure that you make the right decisions with the least amount of stress.
Here are 20 to-dos to focus your efforts to restart:
Meet with your bank. Banks get nervous. They don’t know how your business has been affected, or what reopening looks like for you. Don’t surprise them. Arrange for a meeting to discuss your plans, your concerns and tell them the kind of help that you’re going to need. Tell them:
- How your business has changed – how your sales have been impacted.
- How your overhead expenses are going to change as you restart your business.
- What your profit picture is through the end of the year.
- If you need more money, explain why you need it, and how you’re going to pay it back.
Create a cash flow forecast, so you can understand what your needs are going forward.
Examine your open AR. Contact each of your open accounts. How many of them are not able to pay what’s due? You’re operating as their bank. You don’t want surprises either.
Reexamine your budget for this year. Put a new plan in place so that you have a full understanding of your sales, costs and expected net income.
Be sure to process your PPP forgiveness application. A 1% loan is a great loan, but not having to pay it back is even better. Get that application filed as soon as you can.
Determine your optimum staff level. If you’ve reduced staff, you may be operating with a new normal. Examine operations over the past 3 months and set a new standard.
Inform your employees of changes to hours, pay or benefits. If you’re reducing staff, benefits or pay, be upfront or morale will suffer. Reduce staff once, to the deepest level that you’re expecting to have. Don’t do it in stages, because everyone will be waiting to see if they’re in the next round.
Establish a policy about working from home. Many companies have been working from home over the past 3 months. Establish a policy so it’s handled uniformly and communicate it to everyone.
Revise your employee manual. This is your company’s rulebook. With all the changes, it assures that everyone has the same information.
Establish a consistent policy for terminations and layoffs. Review it with an employment attorney to avoid problems down the road. Employees might consider some of your actions discriminatory. Advance planning will pay off handsomely down the road.
Evaluate how your business has changed. A business plan isn’t something that you just create when you start a company, it’s a Strategic Plan for how you’re going to manage and grow over the next 2, 5 and 10 years. This pandemic has changed the plan for nearly every business. Take time to review how your business has changed.
Create a new Strategic Plan for your business. Now that you have the list of how your business has changed, write a new Strategic Plan. It’s a playbook for how you’re going to operate into the future.
Decide how your products/services and delivery have changed.
- Decide what products or services you’re going to phase in or phase out. Understand the effect on your customers, suppliers, and inventory on the floor.
- Let your customers know of your changes, along with providing alternative solutions. Remain a trusted resource for your customers.
- If your cost structure has changed, update your pricing. Be sure that you give your customers fair warning. It could spur sales before the increase.
- If you make product changes, keep your staff knowledgeable. As a customer, it’s very frustrating to find out about changes to products you buy, especially if nobody at the source knows the answers. Be knowledgeable and reliable.
Employees have new equipment so they can work remotely. Laptops require different policies than desktops. Be sure your employees understand the company’s policies. It should be in your employee manual.
Working remotely puts your network at risk. As a result of increased phishing activities, your company faces more hacking and ransomware threats. Ensure each employee understands the risk of opening emails that come from uncertain sources. Unusual requests should be treated suspiciously.
Working from home, and increased familiarity with Zoom has created a different understanding of what is “needed.” If your company no longer needs a large office space, determine your actual requirements. Every square foot you rent adds to your expenses and reduces your profit.
Negotiate with your landlord about changes to your lease. You might be able to reduce your footprint and your costs. If you don’t feel comfortable having the conversation, get some skilled help. Using a commercial realtor or a real estate attorney might be all you need to get a new deal.
Contact your primary customers to tell them that you’ve reopened and that you’re ready for business.
Evaluate each customer and decide if you should establish new credit terms for them, based on how they’ve come through the pandemic.
If you’ve opened new product lines, put a plan in place to reach out to existing and new customers to offer them the new product/programs.
Again, Talking to an employment attorney, banker, commercial realtor, marketing expert, and even a CFO can make sure that you make the right decisions with the least amount of stress.