Businesses will suffer crises; how they survive depends on upper management. CEOs make the final decision and serve as the face of the company. What’s more, other employees will follow their example. We believe that cash management as a tool can help CEOs grow and thrive in their business during a time of crisis.
How are you handling disasters in real-time? These can include hurricanes, workplace accidents, or recessions. Can you foresee economic downturns and know how to ride out the metaphorical storm? If not, then consider how you will survive especially when each day seems more chaotic than the previous one.
How To Handle The Worst-Case Scenarios
You can make crisis management decisions into a system when cash is involved. While CEOs need to be flexible within the moment, a few guidelines and steps can help.
Make Sure You Always Have Cash
This is our main point: you need to have available cash to stay in business. The minute you run out, your business is no longer profitable and you need to close shop. That’s why you can’t reinvest every dollar of profit into the business. Some money needs to be put aside for a rainy day.
We have seen that having an emergency cash flow line helps those in a crisis. Solicit help from angel investors or friends that may have some cash on hand, with paper guarantees that you will pay them back. Proactively apply for business loans, and maintain a strong line of credit.
Cut unnecessary expenses. Reduce travel, especially with the COVID-19 crisis. Does everyone have to work from home? Then try to renegotiate your lease. Review your owners’ salary, and determine that it is fair relative to the business.
Detail Procedures You Can Implement Quickly
Time is of the essence. Your lack of action can speak volumes to employees, investors, and customers. Thus, you need to prepare to act. It can save you costs in the long-run, as well as a reputation.
As a CEO, go into specific procedures that can cut costs and increase cash flow. If you decide not to cut prices on products — and we recommend never doing that — outline how you are going to increase the profit margin regardless.
Why do you need to be specific? So that people can follow the numbers, and repeat the process. Then you can identify areas of weakness and improve them. No one can misunderstand them.
Along the supply chain, groupthink and poor communication can lead to exponential desires. Especially with the Internet sending messages within seconds, we have no excuse for when a game of telephone gets played. This especially applies when we are sending and receiving invoices, needing to pay them.
Have your PR team and social media managers on the same page when communicating with customers. Reach out to bank representatives and investors, to explain clearly what you need.
Send invoices on time, as well as regular reminders. Keep track of your payments and paperwork in order.
How about after the danger is past? The tremors have faded, and everyone is back in the office as usual. What can you do to ensure that the business operations resume as usual, as well as cash flow management?
First, thank your employees and investors for weathering the storm with you. Employees are the reason that you are still in business. Show that you appreciate their hard work. Investors want proof that
How does cash flow weigh into this? When cutting expenses, do what you can to not cut pay; if you have to, explain why to everyone clearly. Cut your own salary as well.
Improve Your Management Team With DeepSky
DeepSky wants to ensure that business leaders can handle their financials during any crisis. We offer outsourced accounting services tailored to your needs at affordable prices. Our Financial WingmanTM program is designed for custom advice and strategies.
Reach out to us today to get started on preparing for the future. Let DeepSky handle your working capital during the worst of time. We’ll ensure that your business model can handle the short-term and the long-term.