Living through unprecedented times is difficult for everyone but coupled with the added pressure of trying to operate a business simultaneously, it can feel overwhelming. Over the last several months, companies all over the country (and the rest of the world) have had their agility tested and have had to implement new attitudes, methods and behaviours for navigating their way through this seemingly endless pandemic.

Something to take away from the experience, however, are the lessons that have been learnt by businesses everywhere on how to survive an economic crisis without going under.

Lesson #1 – Forecast Cash Flow

Knowing the state of your finances now is one thing but being able to accurately predict what your accounts may look like in a month, six months or even a year is one of the best ways to protect yourself from external factors like the Covid-19 pandemic.

If you can get into the habit of forecasting your business’s cash flow now, you can use the information to plan a way out of the pandemic, as well as being able to make provisions for any unprecedented future events. It doesn’t have to be a pandemic – it could be something as small and as simple as a shift in the market or a rent increase. Knowing whether or not your business can accommodate such changes is vital to emerging from them successfully.

Lesson #2 – Cut Variable Costs

Some costs are set in stone (for the most part) – rent and bills, for example. Variable costs, however, are subject to change and keeping these as low as possible at all times affords you something to fall back on, should your business run into difficulties in the future.

If you offer a range of services, for example, it may pay you to analyse these and push forwards with the one or two that are most cost-effective, rather than pushing all of them at once and getting nothing in return. Monitor your variable costs frequently and make the most of opportunities for saving.

Lesson #3 – Prioritise Generating Cash

For some businesses it has become increasingly difficult throughout the pandemic to make ends meet.

Prioritising the generation of cash means that necessary costs can still be covered while the chances of entering a negative cash flow are significantly decreased. Offering exclusive discounts or repurposing products to better suit the current market are great ways of generating cash to cover the bills.

Lesson #4 – Know your Suppliers

Everyone has been impacted by the pandemic, including your suppliers. Opening up communications with your suppliers is more important than ever. Understanding their position and the barriers they may be facing as a result of the pandemic is vital to your understanding of how your business will be affected.

Make sure you understand the contract terms you have in place but equally make sure you are making the most of personal contact and communication with the supplier.

This will help you to predict the level of impact supply chain issues will have on your business, allowing you to plan realistically for the future and stay one step ahead of any problems you may run into.

Where suppliers are concerned, expecting the unexpected and planning for a range of outcomes (pandemic or not) will ensure future issues are kept to a minimum.

Even without the added pressures of a pandemic, all businesses go through periods of financial difficulty. These are lessons that can be carried forward after the final effects of Covid-19 have disappeared.

If you require further financial advice to help you guide your business through the remainder of the pandemic, get in touch with Your Finance Team – we can help.