Jam tomorrow – Managing your business finances through the Covid-19 storm

As I am writing this the sun is shining, the birds are singing, the world is turning but everything else has been turned upside down and no-one knows what the long term impact is going to be of the 2020 Covid-19 pandemic.
For everyone that runs a business these are stressful and difficult times as you try to balance your priorities between family, staff and customers whilst staying financially solvent.
The UK government has launched many schemes to help (link), but what can you do for yourself whilst stuck working from home to put your business in the best possible position to survive and then thrive once economic activity re-starts?

1. Make sure you really understand your accounts

Now is a good time to spend some time really getting to know and understand your annual accounts or monthly reports.  Reflect on the past 12 months and make sure you understand all the costs you are incurring and understand all the terminology (depreciation, working capital etc).  Dig deep into the numbers and communicate with your bookkeeper and accountant to clarify anything you are unsure of.
Look at the trends: where do your sales peak? how long do people take to settle their bills? when do the large expenses fall due in the year?
Assess all discretionary spend – subscriptions,  etc and cancel them where you can.
Look at all insurances – when did you last renegotiate them or get competitive quotes?

2. Create your own management reports, what are the KPIs that will drive growth?

Use your financial results and bank statements to create your own management reports so that you understand the financial rhythms of your business and will have your finger on the pulse as business picks up.  Make them easy to update and quick to read.  Try and identify the key performance indicators (KPI’s) of your business and devise ways of tracking them going forwards.  KPI’s are unique for each business and are not always financial but they should represent the key driver for the success of the business.  For example, for a cafe this may be the number of customers coming through the door and the average spend per customer, for an internet based business this could be website hits.  They are the early warning system for the business before it filters through to the bank balance

3.  Profitability analysis – understand where you make and lose money

Use this time to start looking at the profitability of all your revenue streams (by product/outlet/type/ etc online vs direct vs wholesale etc) so that you know where your time will be most profitably spent when trading starts to return to normal.  Maybe you need to streamline your product offering? Maybe you should drop direct sales and focus on wholesale only?  By understanding where the most profitable avenues are in your business you can eliminate waste and inefficiencies and return to financial health faster as activity picks up.

4. Housekeeping – get all your admin processes working efficiently, tax returns done, new systems in place

Now is the time to get all those boring admin jobs done that you never have time to do so that once the world returns to some kind of normal you will be running at maximum efficiency and can focus on the revenue generating activities in your business.

Some examples of this include:

  • Organise all the files on your computer into a useful  manner – good housekeeping – delete or archive as necessary.  Make all current files easy to find.
  • Make an early start on getting all the information ready for 2019/20 tax return – no need to wait until last minute Jan 31st 2021, get it out of the way now.
  • Make sure you have been in contact with your bank and have suitable overdraft facilities in place.  Are you happy with the service your bank provides, do they still meet your needs?
  • Look at all credit cards and make sure they are competitive and the right ones for you – are there better deals out there?
  • Get all your paper filing up to speed – assess if you keep too much or too little paperwork and is it organised in a useful manner that you can access easily and make use of to run your business.
  • Make sure you keep a good record of business expenses incurred whilst working from home – desks, monitors, wifi, phone bills, paper etc
  • Take a look at your website, does it need refreshing? Remove any out of date information and refresh your blogs.  Is it SEO optimised?
  • Are all your HR policies well documented and up to date?

5. Create a flexible Cash Flow model.  Try and plan for the new era – stock management, bad debts, working capital

Try and create a basic cashflow model for your business so that you understand where and when the greatest threats lie.
Split it down into three main groupings:
  • Revenue
  • Direct costs (things that move directly in line with revenue)
  • Overheads (the unavoidable costs of running the company)
By making a plan you will have the numbers at your fingertips as you apply for overdrafts and grants.  Try creating several different revenue forecasts and consider the different strains that puts on the cash flow – have you got enough cash to build up stock for any anticipated surge in demand once lockdown is over?  What are the timing differences between staff returning from the furlough scheme and revenue generation to pay the salaries?

6. Training, learn new business skills

If you have any available time left during these worrying weeks, why not use it to learn new skills that will help you run your business more effectively going forwards?

LinkedIn Learning is available for one month’s free trial (link) and there are many other online courses available.  Try and learn to use spreadsheets effectively – the effort will pay dividends when it comes to managing your finances going forwards.

Undertake some financial training so that you can manage your numbers better in the months and years ahead.

7. Brainstorm – get your team to come up with new ideas, no idea too stupid, think bigger.

Brain storm with you teams or other small business owners online as to what opportunities you can take advantage of once this is over.  Are there new outlets or customer types that you can adapt too?  For example, many restaurants have operated takeaway services during lock-down and many more gyms are offering online services.
Consider how you will restart and ramp up working practices once lock-down is complete? – New processes, a varied working lifestyle, will you change how you are organised going forwards? What will be the financial impact of that?


Whilst these are very difficult times for many businesses, it is also an opportunity to plan ahead and get processes and procedures in place to come out of this era stronger and ready for the next phase.

If you would like to discuss any of the points raised above in greater detail or would like help with any of the actions, I am offering free half-hour Zoom appointments until 31st May 2020.  Please contact me by email to arrange a time.