7 Tips to Deal with Cash Flow during Coronavirus
Mar 15, 2020
Now more than ever, we need to be smart about how we do business. Here are my top 7 tips for dealing with cash flow to ensure business success:
1. Review your expenses.
Firstly, let's look at your business costs. For each items ask yourself these questions:
- Is it essential?
- Is there a less expensive alternative that will provide the same result
- Can we do without this for a period of time whilst we ride out the current challenges?
Secondly, do the same with your personal/living costs. By reviewing both business and personal expenses, the aim is to reduce their drain on your cash flow.
2. Aim to put 10% of your income aside into a savings account to build a stash of cash.
This is difficult to do and a bit like the mantra of "pay yourself first before you pay your bills". If 10% is just too hard as your cash flow is already very tight, start with 5% or even 2%. It may not be much but every dollar saved, may save the day in the future.
Do you remember the Christmas savings accounts where you'd put a set amount into a bank account each week and then in December you'd be able to draw it out to buy presents and food? At $ 20 a week that was $ 1,000 at the end of the year.
The idea is the same here, although not to necessarily have it for the holidays, but rather as a way to build the stash of cash to help you through the toughest of times.
3. Review the way you do business.
If you have face-to-face meetings, consider moving them to online video meetings. My preference is Zoom where you can have a meeting of two or a meeting of many all of whom can be seen via video (unless they don't have a camera in their computer).
I've been doing meetings this way for some time now and whilst they aren't quite as good as the face-to-face, it's almost as good and a lot better than a phone call as you can see their reactions as you speak and know instantly if they don't understand what you're talking about.
4. Look for ways to offer your services in a different format.
One of the conferences I was due to attend in April has been changed from an in-person event to the event being held at exactly the same time but online instead. We can all still attend, but from the comfort of your offices or homes without the need to travel and risk being exposed to the virus.
From the conference organisers perspective, they don't have to lose out on the cash flow from the event. From the attendees perspective, they don't have to pay for travel and accommodation costs. Both sides get the benefit.
5. Look for opportunities.
Consider what your clients are needing or wanting right now and how can you provide that for them.
There will be a number of 14-day programs come to light in the very near future to provide information, training and/or support to those self-isolating or being forced to isolate. Those businesses have identified a way to inject cash flow into their business at a time when perhaps other income is diminished.
6. Chase up outstanding invoices for payment.
We all need the money to keep moving and cash flow to flow through our businesses. Make sure you get paid what you're owed, and in return, you keep up the payments to your suppliers as well.
7. Know your break-even revenue figure.
This may be a time when the best you're going to be able to do is aim to keep your business afloat until the good times roll around again. If that's the case, the most important number you need to know is your break-even. This is the revenue you need to make each week or month to cover all your costs. It's just enough to keep your cash flow going.