Can you keep your company running in this time?
It is a time of low sales (or none at all), difficulties in moving products, in supplying ourselves, at the same time that there are salaries to be paid, bills for basic services (and worse now with the rise in energy prices).
This is being suffered by practically all businesses in the world, regardless of their size, which is why it is urgent to take economic protection measures.
It seems simple, some will say: “if you reduce your income, you have to do the same with your expenses”, but it is not so easy… what exactly are the expenses that we have to reduce and how much? What about those expenses that I cannot reduce or eliminate, such as financial commitments, among many other dilemmas?
To help you make better decisions, I try to condense here 3 recommendations applicable to all types of businesses, to keep your company running
All money outflows that are not closely related to the operation of the business can be reduced or eliminated. The idea is to keep only those expenses related to production or operation.
It is time to analyze which expenses are not indispensable. This ranges from turning off air-conditioning and lights, or office expenses such as stationery and coffee, to analysing whether that rental expense is necessary (office, premises or warehouse) or whether it can be reduced (changing premises, their size or negotiating the monthly payment with the landlord).
We recommend looking for alternatives to acquire your inventory at a better price, which is possible with a good negotiation. Remember that this situation is also suffered by larger businesses, so they also seek to place their products.
It is also advisable to create business hours or work with “split hours”.
For this you must first have clear what are the hours when sales are normally better and work on this basis.
If you work under some kind of employment regime in which you pay social benefits, it is time to send your staff on vacation, in a staggered and organized way.
2-Protect your liquidity
It’s time to take care of your cash flow more than ever. Cash, money in accounts or any asset that you can easily realize and convert into cash, is your treasure, and in order not to compromise it, certain additional measures must be taken.
Additionally, you must avoid or reduce as much as possible any investment that compromises the liquidity of the business.
3-How to improve sales to keep your company running?
The specialist recommends reducing the selling price of your products or services as a quick alternative to improve turnover levels. “In times of crisis, consumers take a conservative position and will choose whoever provides their needs at a lower price,” he adds.
WARNING: this decrease must be very well analyzed, after calculating very well your production/operation costs.
We suggest the possibility of modifying your inventories, that is to say: in case your business is not focused on covering some basic need, opt for products or services of that order.
“To do this, you must first liquidate the inventories of goods that are not basic needs and with the money you recover, buy the new inventories.
The same should apply to businesses that provide services (and now are stranded, such as tourism): do not discard the possibility of opening to a second economic activity, while offering packages to your customers, “so that they feel they are having a saving, offer something that other similar suppliers could not. You may even consider making alliances with other businesses for such packages, why not?
And the debts?
Remember that the credit contract you signed is mandatory, so if you are having difficulties in the business, it is time to start contacting your suppliers and/or financial creditors.
In the case of your input or raw material suppliers, if you have maintained good relations with them, you can ask them for flexibility in the payment date.