Financial planning is key to all businesses and in a Covid-19 world this is even more important. Most businesses are looking to recover but for the lucky ones they are building on success. It is key to have an effective strategy for your business and vital to focus on five areas: The 5 C’s: Cash, Costs, Control, Communication and Customers.
Factotum works with fast growing owner-managed businesses across the sector to help business owners focus on what they do best, while factotum does the rest. Experienced professionals provide the right mix of advice services and support specifically for your business including HR, IT, Marketing, Payroll, Bookkeeping, Accounting, Insurance and everything in between. Here Bobby Lane, Factotum CEO, explains the 5 C’s in depth.
Cash
Having an adequate cash flow within your business is crucial now, more than ever. Uncertainty remains, so forecasting the cash required to keep the wheels turning is critical. You can have the most profitable business in the world but if you can’t pay the bills you will not be in business for very long. Put cash into reserves for unexpected emergencies especially with Covid not going away.
Costs
Review every line of cost from production to overheads. The overall goal is to convert as many of your costs to variable rather than fixed amounts. The need for office space is a perfect example – during Covid, many people assessed what working space was required and if they could downsize to smaller offices. Ask yourself too, can you outsource non-core services such as accounting, HR, IT support and Marketing? This can reduce the amount of office space needed and also the cost of these functions. Can you introduce commission structures to reduce basic salaries for your team?
Control
Be in control – you must ensure that you are controlling your businesses and not let your business control you. As a business owner make decisions based on accurate up to date information rather than estimates and instinct. The last few years has witnessed huge developments in systems that enable smaller businesses to forecast, manage their information, reach their customers and generally be informed as to what is going on. Now is the time to implement these systems it could be more straightforward and cost a lot less than you think. Quarterly accounts should be produced as a minimum outlining your profit and loss and your statement of assets and liabilities along with the cash position. Having a business plan forecasting at least 12 months ahead is also vital for planning.
Communication
Communication is key both internally and externally. Keeping your team informed of what is going on, why decisions have been made and where you are going has been, and will remain critical to future success. In addition external communication whether digitally, through more traditional means or via personal meetings is vital so that external stakeholders know that you are open for business and what you have planned. Online meetings are more accessible than ever but remember too when possible to arrange face to face meetings and pick up the phone to check in.
Customers
Without your customers you don’t have a business! It is time to focus on the customer journey and experience. If your existing customers are not getting what they need from you they will look somewhere else. Understand their needs, identify how you are working with them and constantly look to make improvements. Remember it is easier to build on existing relationships than it is to win new ones. Also focus on where your product or service can be stretched to build new customers. During the crisis many businesses went from bricks and mortar to an online provision. Make sure that you are operating where your customers can find you and where they want to find you!
