Let’s prepare, not panic- what small businesses can do to survive the COVID-19 crisis.
Blog: NASSCOM Official Blog
Starting from checking your Fund reserves to brainstorming with your team, here are few practical measures you can Perform to manage, this rapidly evolving Covid-19 Crisis situation. These guidelines will help you to overcome your front lines of the impact.
Current Financial Health Check – It’s very essential to make informed decisions about your business based on your current financial or balance sheet.
Check Possible Business Impacts – The impacts on business will likely be most significant in the following area: reduction in sales, staff availability, supply chain challenges & low cash reserves.
Rework your Budgets – Whatever assumptions you may have used to Plan your budget are most likely no longer relevant. So, take the list of possible impacts of COVID-19 you have developed and re-do your budgets. In addition, carefully consider how those scenarios impacts your cash flow.
IMPROVING CASH FLOW: After re-working your budgets and determining the current financial health of your business, you must act. The first step to improving cash flow is to prepare a cash flow forecast and update that forecast throughout the crisis on weekly basis.
The following tips to improve your cash flow may appear unconventional and some of them we would not fit for your business or be recommended in a normal situation. This is just a possible guideline summarized for you to act upon, based on your line of business.
1.Customer Management: Reach & request your Customers to pay you earlier, even if before the due date. If your customer is experiencing cash flow difficulties, negotiate periodic payments and make sure they stick to their deal. In conjunction, review sales contracts to determine under what conditions customers can cancel orders. If necessary, update those contracts to limit the ability to cancel orders.
2. Supplier Management: Ask for payment extensions, even temporarily to your credit terms with suppliers. Review your supply agreements to determine under what conditions you can cancel orders if necessary, or at least delay delivery. Request and negotiate tax installment plans with the tax authorities.
3.Stock Management: Direct your efforts towards to increases in sales, especially for products that may not last longer and focus your promotions towards these Products. On the other side, reduce stock orders for low demand products at this time. Start increase the purchases of Products that will be in high demand, during this crisis.
4.Spending Management: Stop spending on what you believe is unnecessary in a crisis, an example of this would be capital expenditure. Plan to reduce staff costs by reviewing staffing arrangements such as reducing employee count, using contractor or reduced working hours, and implementing a recruitment freeze. Reduce withdrawals from the business during this Crisis if possible.
5.Cash Support: Reach out to Bank and lenders about increasing your overdraft facility. Check your own personal funds position to see if you can more inject cash into your business. Seek for other investors to see if they can Invest into your business.
6. Other Plans: As a change in your business model – Increase your investment in selling online channels. If you are not selling online, you should prioritize consider going online. Research and seek different ways to deliver your products or services to your customers during this time.
Entrepreneur, Co-Founder & CEO
Expert Solution Technologies Canada Inc.
Manickavel Muthusamy is the CEO & Co-Founder of Expert Solution Technologies Canada Inc. An Entrepreneur with in-depth understanding of Sales &Marketing of IT Services, Outsourcing and Global Delivery, worked with leading MNCs in multiple geographies including India, Canada and USA in his career spanning over 22 years. Currently owning a software firm in Canada helping Small & Medium Size business with a wide range of accounting technology solutions & services.