During any crisis your business will face, or even you as an individual or family, having access to cash can get you out of a lot of trouble. Planning for any crisis your business may face will give you a peace of mind and also the tools to face that crisis head-on. Especially a financial crisis. We have faced several major ones before, and another one is coming in the near future. The fact that they are somehow regular, and we know we are going to deal with a major one soon means we have to do our homework and prepare our best for it.
One of the most important factors is to have our cash during the financial crisis. This can make the difference from our business staying afloat, or going under. Cash is very important even during normal working times. It becomes absolutely vital when an economic crisis. During a widespread crisis, there is not just one business affected, or one economic sector, or even not just one country. A lot of people and businesses will be affected, and panic will be their immediate response. You will then see orders for your products or services dropping, customers not paying their invoices, suppliers who go bankrupt. This will mean less cash for you, but you still have bills to pay, and an activity to keep functional. You want to be able to retain your employees, and to be able to pay them.
It becomes obvious that all these things can’t be happening at the same time. Your crisis management plan should include ways of securing your cash for your business.
Your first priority is to see what customers owe you money, what invoices are unpaid. Reach for them, offer them discounts if they immediately, make sure they pay their bills. Present them the benefits of keeping working with you. And the fact that they are not alone during these difficult times, but they have a good ally in you. You will want at the same time to negotiate any discount and favorable terms with your suppliers. After all, you are also in need of cash too. But you should not ruin the working relationship you’ve built during the years. Just make sure you can get the best deals possible so you can have as much cash during the financial crisis as possible.
Unfortunately, a financial crisis means most businesses will have to cut costs of their staff. There are several ways to do this, such as cutting the expenses by a quarter for example, or even letting people go. As hard as this may be, workforce expenses are usually your main part of your costs. Keep your best employees, and reduce costs, so you can cross this crisis safely and see the end of the tunnel. You can even thrive and reach new heights after it, and it should not pass without you learning some lessons from it. Cash flow should be a big concern for every entrepreneur, and you should have your plans made how to handle it during any type of crisis, especially a financial crash.