Pivot and (Cash)flow

Let’s face it: this has been a hard few weeks (months) for business owners. How can you weather this storm? We know it’s overwhelming to try to plan when things are so uncertain.

What is really in your control? We talked to our experts – the ones who help businesses grow everyday – and they’ve offered tips on a few areas of your business you should evaluate during these unprecedented times…

1. Look at your numbers and cost structure.

• Look at the numbers. Carefully and closely. Understand your overhead and costs.
• This is a time to re-evaluate priorities and focus on key projects.
• It might be tough to let go (temporarily) of the projects you were excited about pre-COVID, but right now is the time to focus on what’s bringing value, and bringing in cash.

2. Is it time to pivot?

• Jumping off point 1 – maybe you need to pivot to start bringing in new revenue streams.
• Can you adapt your manufacturing processes with only a few slight tweaks, to make products that are more in demand now than they were before? Can you make parts for PPE or items to assist companies in taking their workforces remote more comfortably?
• This may be for a short period of time, but if it only means a few slight alterations, it could mean extra cash to tide your business over for the time being.

3. Identify government support

• There has been a plethora of programs introduced to help companies recently; and initiatives continue to role out.
• Our Richter team has been closely monitoring the developments and providing insights to our clients and friends.
• Are you eligible for the Canada Emergency Wage Subsidy? Answering these questions may help you navigate the rules. Richter professionals can also help evaluate your situation and advise on what programs would be best to apply for – from wage subsidy to rent relief.
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4. Strengthen your balance sheet

• Businesses need to be prepared to continue operating in a much different environment for the short-term.
• It may not seem like it at times, but we will get through this. Try to prepare for your relaunch and consider what will be needed to make that happen safely.
• To that end, remember that supply chains have been interrupted, and it’s likely that different sectors will come back at different times. You may need to fund working capital and allow for time when employees need to readjust their schedules and realities to cope with the “new normal”.

5. Monitor your cashflow

• Monitoring cash flow on a weekly basis is a good habit to have pre-COVID and post-COVID and most importantly during this period of time. If you haven’t been doing it, start now.
• Remember, positive net income does not mean positive cash flow. There can be many adjustments from net income to cash flow such as adding back depreciation, working capital, normalizing expenses. Net income is not a true reflection of cash.
• Use your forecast to understand the impact of operational and financing changes such as declining sales trends; management of inventory production to meet customer demand; and deferral of debt repayments or rent amounts. Update your cash flow statement as new information emerges.
• Forecasting will be just as important when businesses begin to open. Having supportable cash flow projections before, during and after COVID-19 is imperative.

These points seem straightforward – but if you’re feeling lost, helpless and/or overwhelmed, we hope these simple steps will help you gain perspective and a small sense of control as we all get through this, together.