Calling current times "truly extraordinary," the chair and business advisor of the Lunenburg Queens Business Excellence Awards, Shawn Allen, has issued some advice on behalf of the group to local businesses trying to cope with the COVID-19 pandemic.
"There have been many crises over the years, but few of us have lived through a time when a state of emergency has forced businesses to close their doors and customers are being told to stay home. Cash flow has always been the life blood of business and the longer this crisis extends the greater the strain that will be put on current cash flow," wrote Allen in a prepared statement.
The statement contained a number of steps businesses can take under the circumstances to protect their bottom line.
Of paramount importance is for business owners to fully understand their current position.
"Knowing how much you need to cover current expenses is a great starting point and gives perspective on the real need. Knowing what you have to cover these expenses defines the immediate challenge," said Allen, who has his own consulting firm, Windward Business Advisement.
He also reminds business owners to remember they are not alone. "This crisis is touching everyone including large and small businesses.," he said. "The difference is that rarely do small businesses have cash reserves set aside to operate when cash flow is low."
Allen suggests business owners make a list of their suppliers and creditors, such as banks and a landlord, "and divide these into categories defined by size and importance to your business."
He notes that larger suppliers will often be more willing to extend terms because they have larger reserves, whereas smaller suppliers are less flexible.
"Start making the calls. It is often difficult to pick up the phone and ask for help, but your suppliers are expecting to hear from you. You may be surprised by the understanding you get. You are as important to your suppliers as they are to you," said Allen.
As well, he suggested there's an advantage to making the first move, "before the supplier calls you for payment. Being out in front of the problem makes your negotiating position much stronger."
The consultant also advised business owners to pay their staff, landlord/mortgagor and local suppliers first. "You can't do business without staff, even if it is a skeleton crew. You need a place to operate so talk to your landlord/mortgagor and try to negotiate some short-term relief."
The consultant also noted the importance of staying on top of receivables. "Receivables are going to get longer as cash flow also slows for your customers ,but don't be scared to make the call. If you follow up, are polite and understanding, you stand a much better chance of receiving a payment."
Moreover, he advises business owners against trying to be heroes. "Do the best you can for staff, suppliers, creditors and customers, but you need to make good financial decisions for your business to have a future," said Allen. "No one likes to lay off staff, run long on payments, or push for receivables, but if you don't there may not be a business when this crisis has passed. Be thoughtful but be smart," said Allen.