Darren Upson, VP for Small Business at Soldo offers suggestions for protecting your business’ finances during a crisis.
We began lockdown in 2020, but we’ll emerge with the widespread adoption of technology that we would otherwise have expected of 2025.
This is an unalloyed positive, as the right software provides greater flexibility, efficiency, control and productivity than the frankly, antiquated alternatives.
Despite the positive impact on technological adoption, it would be remiss to ignore the devastating impact that the coronavirus and ensuing lockdown have had on businesses of every size and across most industries and it isn’t over yet.
Businesses, many of which are already in a tough predicament, are staring down an impending recession. Defending cashflow is perhaps the most fundamental part of maintaining a successful business, but at a time like this, it is even more challenging than normal. What can businesses do to ensure that they can survive the hardships that are still to come and set themselves up to thrive in the long-term?
1. Maintain focus on company spending
Now more than ever, it’s vital to understand the money that is coming and going from your business. This means making the most of the powerful tools that are available, removing friction points for incoming payments, and keeping an eagle-eyed view on money leaving the business.
Businesses have always lived and died by cashflow, but as we teeter on the precipice of a potential recession, the margin for error is particularly thin. Companies need the right financial processes to eliminate waste, control finances, and stay in the black as they begin the slow march toward recovery.
This renewed focus on spending should extend to money spent on customer acquisition. Unsurprisingly, customers are acting differently in this strange new world, and your customer strategy should address that. Reconsider whether expensive acquisition channels are the right choice for your business and double down on the low-cost ones that you have found to be effective.
2. Retention is the new growth for most businesses
Considering both the money you have already spent to attract existing customers and the challenges inherent in attracting new customers at this point, retaining them should become a top tier priority for businesses. If you can afford it, offering discounts can help customers with tight budgets to stick with you. If not, it’s still possible to generate value for them, it just requires a little extra creativity.
This bind will be temporary, but customers will long remember the businesses that went above and beyond to support them. Customers that you acquire now, while still important, are likely to be of less value than pre-Covid customers, which businesses must consider when tracking the churn rate of customers.
Businesses must be wary of offering their products for free – especially to non-customers – since this can set a dangerous precedent. It’s always better to offer services at a discounted price to avoid attracting low-value customers who will disappear as soon as the bill arrives. At every step, consider the payback you hope to see in the future and if you do choose to give products away, ensure you have a plan for monetising these customers in the future.
3. Reassess, reconsider, redesign
Similarly, businesses should reconsider the roadmaps for upcoming products and initiatives ask yourself “will these plans still be viable in a post-pandemic world, or is there a better use of company resources?”
Ambitious businesses can even consider tearing up their financial plans altogether and building something new from scratch. Plans from this year didn’t account for this crisis, so it makes sense to discard them and start anew, conducting a detailed analysis of the present situation at every step. This will ensure that the business is fit for the world we live in, not the world we thought we would be living in.
A business cannot exist without its employees, and as we begin (slowly ) to emerge from the crisis, you may be considering hiring. As existing employees’ salaries may have been cut and monetary incentives are hard to come by, businesses will have to take a much more creative approach to attract new talent.
It might be time to consider options like offering dividends or setting up loyalty schemes. It’s better to offer something than to risk losing great talent.
Remember no crisis last forever
This crisis will eventually come to an end, and the businesses that make it to this point will be those that recognised the crisis, took necessary steps to adapt, and used initiative to meet new needs.
At the most basic level, as long as businesses make use of the tools and opportunities available to ensure that more money is coming into the business than is leaving it, they stand a strong chance of coming out the other side.
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