A once-a-century pandemic and its resulting financial crisis may seem an inopportune moment for companies to position themselves for the future. But in fact, this break from business as usual may be the necessary time to take stock of your company's short and longer-term financial plans and goals. Meeting with your community banker can help you review everything from your business plan to cash flow to fresh potential sources of revenue. This collaboration could leave your company poised to emerge from the COVID-19 recession ready to soar to new heights in the post-pandemic business environment.
Speak with your community banker about all the following strategies.
Preserve cash flow
Cash remains your company's lifeblood. Preserving cash flow is more than ever central to its existence. Work with your banker to institute measures like ACH services, enabling customers to pay your company more conveniently and expeditiously.
These options can help keep the cash circulating during these slower times, positioning your company for robust revenue inflows in the improved business climate ahead.
Examine your debt
Your company won't fare well during the crisis and afterwards if its debt service is not sensibly addressed. Your enterprise may have the resources to eliminate debt right now, but that may not be the best approach. By contrast, your company could be short of available funds and need to work with creditors to agree on a longer payment timetable. Your bank can help your company achieve a cash flow balance, paying debts over time as business operations generate revenue.
Retain your customers
Customer relationships you've built over time are at the very heart of your success. They will be for years to come. Don't let a health and financial crisis like this jeopardize these hard-won relationships. Stay in close touch with customers. Hold video meetings in place of in-person get-togethers. View COVID-19 not as a threat to the rapport you've built with customers, but as a chance to fortify these crucial ties.
Review your business plan
In light of this pandemic-sparked watershed moment, scrutinize your business plan to determine whether it remains relevant. Consider adding more immediate action steps to see your company through the COVID-19 crisis.
What steps will help you quickly move forward when normalcy is restored? Developing a plan within your business plan can help wring clarity out of a confusing period.
Many companies have had their financial resources sapped by pandemic-related expenses. If your company is among them, and the government's Paycheck Protection Program has proven insufficient, decide whether you will need financing to recover or continue your business. A loan can offer a lifeline to get your company through the crisis. Whether you need to make up for lost cash flow, pay for overhead or make payroll, your community banker can provide insights needed to determine what type of financing to seek, and best steps to take beforehand to increase chances of approval.
Identify new revenue sources
As in any crisis, new opportunities have opened during the pandemic, and some firms have flourished at a time others have floundered. For instance, home improvement chains have prospered, as have software developers, home delivery services and Internet-enabled communication providers. Explore ways to prosper from a new normal evolving from the lockdowns and quarantines. Are there ways for your company to serve new markets emerging or profiting from the crisis?
Develop or enhance emergency plan
Having addressed the steps above, fine tune your company's emergency preparedness plan. You've learned much during COVID-19 about what does and doesn't work in a company's crisis response.
Alter your emergency plan accordingly. Talk with your banker about emergency scenarios. Discuss how they may impact revenues, cash flow and ability to pay obligations. Develop a plan to address each possible peril before it materializes. When a strategy's in place for every potential threat, you're better prepared in event of future challenges.
A health and financial emergency can be a scary time for company owners and managers. However, history is replete with stories of companies that viewed a daunting time as a chance to rise, and leveraged the moment to become more successful organizations. With guidance from your bank, the COVID era could be your company's catalyst to move forward, growing sales, revenues and profits in the years ahead.
Located at 2001 York Road in Oak Brook, Leaders Bank is a premier community commercial bank catering to private business owners, their families and other entrepreneurs. Leaders Bank offers a full spectrum of traditional and customized banking services, Internet-based banking, and online bill payment. To contact Leaders Bank, call (630) 572-5323 or visit www.leadersbank.com.
Originally published in Illinois Manufacturer magazine: https://ima-net.org/wp-content/uploads/2020/11/Fourth-Quarter-TIM-2020.pdf