Coronavirus has slowed or shut down parts of the world's economy, causing substantial disruption to many businesses. You can address the impact head on by exploring new, untapped revenue sources. It just requires taking action right now.
Making choices in the following focus areas can help you get your footing in this new reality.
1. Prioritize cash flow
Plan what needs to be done right now and over the next month to keep the company at least at a break-even profit level and cash flow neutral.
This may mean cutting expenses or redirecting your efforts if your sales drop more than 10 per cent. Pay special attention to fixed expenses that do not change with lower sales: What can be cut now to save money in those specific areas?
Look at each expense on your profit and loss statement. Ask the question, "as sales go down, will this category of expense also decrease proportionally?" If it does not and it is a more fixed expense, determine whether it is directly related to attracting or retaining customers. If it is not, consider cutting that expense.
That said, be careful about cutting too much of your marketing expense immediately since marketing keeps your sales pipeline full. Instead, ensure all marketing activities are directed at customers that still are good prospects.
Start by creating a spreadsheet of all the marketing initiatives your company is doing. In the second column list who that activity is aimed at (prospect or customer) and in the next column list what stage they're in (presales, service delivery or post service delivery). For each marketing activity, also note the cost of the initiative and the actual or expected return. Rank them from most valuable to least valuable and begin cutting marketing expense from the bottom.
Forecasting Cash Flow
You should consider forecasting and conserving cash flow since accounts receivable payments always slow down during these types of events. Create a spreadsheet of what your expected cash flow is for next month. Start by listing your cash bank balance. Add cash you expect to collect and subtract bills you need to pay to forecast your new cash balance next month.
Also, carefully monitor accounts receivable by billing customers as soon as the product or service is delivered and following up weekly on when the payment will be made even before 30 days. You can also offer shorter payment terms to customers or discounts to those that pay in advance.
Secure cash flow loans now, even if you don’t need them immediately, as an extra precaution.
2. Find new revenue streams
Now is a great time to examine the viability of your company. If the coronavirus pandemic and economic shutdown causes a recession, how will your company react over the next 18-24 months? Think of a world where customers rarely leave their homes and how this affects the products and services that you offer. Reimagine what your market will be like in this new environment and pivot to meet it.
If you are especially hard hit because your company depends on a physical presence, look at your sales and marketing strategies. Can you offer fewer products or services? Could you focus on a separate area that delivers services in a different way? One of the benefits of unexpected change is that when a company is forced to rethink their business, it opens up new revenue streams that are still there when the economy returns to normal. For example:
- · a physical therapy practice can add telemedicine now and keep that practice vertical later.
- · an in-person tutoring program can add online video sessions with students.
- · a dance studio can offer online dance training.
3. Sustain your customer community
No matter what, stay in touch with your community so they will still think of your company when they're able to engage with you again. During these times, people want to follow leaders and be part of a mission that is larger than themselves.
Find ways, especially during the initial period of disruption, to keep your community together. You can work with your marketing team to reach out to customers to do activities online, even if they don’t produce immediate revenue. For example, since a physical therapy office can no longer see patients in person, they may offer a free daily or weekly check in on the best ways for patients to stretch, come back from a variety of injuries or a list of exercises to do at home.
The office can promote these free interactions alongside the paid services like telemedicine they still offer. These marketing activities will help ensure your customers come back when the economy improves. It also helps bond customers to each other and your company because you're all going through difficult times together.
Most importantly, don’t hesitate. The actions you take now can determine how your company thrives in this new economy.
This article was adapted from an earlier version https://amex.co/2AgtPbY
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.