Happy New Year…
We have just witnessed one of the most stressful years on record for disruption and uncertainty in our business affairs. And we are not out of the woods just yet. The first half of 2021 is likely to be more of the same until, and if, vaccines can temper the spread of COVID-19.
The virus is evolving, producing thousands of variant strains. As the new year turns we are all holding our collective breath that vaccines in production will shape up to meet these challenges.
Meantime, what should we be considering to meet the challenges of 2021?
Cash is still king
Cashflow is still of paramount importance and if you have not considered producing a forecast at least a year ahead, and one that you can update as circumstances change, then this is a must-have management tool for 2021.
To do this you will need to keep abreast of any factors that will change your turnover budget for 2021.
And flexing turnover means you will need to update costs and any other features of your business finances that will have an impact on cashflow.
New income streams for your business?
As well as maintaining your existing customer relationships and winning new customers in your chosen market place, now is a good time to look at creating new income streams for your business.
This is one of the new buzz words that emerged during 2020. If your business is sensitive to lockdown, most hospitality businesses for example, your experience of managing COVID disruption will be very different from businesses, particularly online concerns, that have flourished during 2020.
The constant disruption to your normal trading cycles may have pushed your business to a point where the only step left is to cease trading and many fine businesses will have considered this option.
In in these dire circumstances there may be ways moth-ball assets and place your business in hibernation until this COVID bug is tamed and we can start to use the “business is back to normal” phrase once again.
How could you benefit from a business health check?
In a recent update sent to our clients we said:
Every business will have its own unique challenges aside from the constant threat posed by COVID disruption. Accordingly, the benefits you could expect from a thorough business review at this time will depend on those unique challenges.
However, you should at minimum expect to:
- Identify challenges presented by COVID and our withdrawal from the EU.
- Create strategies to counter those threats to your business.
- Identify new income streams for your business.
- Reshape business plans – financial and operational – in order to quantify these financial consequences.
- Identify weakness revealed in cashflow and funding and seek to plug those gaps with additional funding. Government backed loan schemes for example.
- Reveal loss making periods and seek to minimise these periods such that hard-won reserves are retained as far as is possible.
We also described some of the issues that would need to be considered. They are:
A review of:
- Your accounting software, to ensure you are making most of its reporting functions.
- Sales forecasts. What are the opportunities for creating new income streams?
- Direct costs – including supply-line and cost implications of EU withdrawal.
- Overheads including staffing options as COVID support grants are phased out from May 2021.
- Cash flow forecasts.
- Solvency – if you need to operate at a loss for a period, how long can this be sustained without exhausting your hard-won reserves?
- Funding including management of COVID related bounce-back and other loans.
If you wish to speak to a member of our team to consider how a business health check might be appropriate and beneficial to your business please contact us on 020 7330 0000.