While your business may have learned to ‘pivot’ in the past year, it's important to appreciate the opportunity and understand its key role in building a stronger, more profitable business.
Always have a plan B
There's nothing like the confidence you get from being prepared. By undertaking scenario planning, you can consider the worst possible situation, as well as the best, and be armed with appropriate strategies to deploy depending on how things play out.
Forecast cash flow
A cash flow forecast will track anticipated income alongside expenses to see when your costs may exceed income. It’s about understanding how often you’ll need to dip into your cash reserves and if you have sufficient cash to support seasonal trends.
Value improvement
Making significant changes to the operational and financial structure of your business should be carefully considered. It’s a careful balance of growth, efficiency and organisational activities which take time.
Cut costs
Given the competitive pressures that companies face today, many are seeking to cut costs and improve margins. Are there any non-essential costs that can be cut or reduced, even in the short term? Every dollar counts! It’s tough but sometimes it pays to renegotiate contracts with suppliers or encourage staff to work from home some days to reduce overheads.
Understand profitability
Understanding profitability should go much deeper than just having visibility of your gross or net profit, instead, you should seek to understand your profit margin on every product or service. This will give you a better idea of where your focus should be.
Streamline accounts
Simply improving your process for payables and receivables can make a big difference to your cash flow. When it comes to receivables, make sure you invoice promptly and have a process for following up overdue payments.
What’s next?
Without significant government financial support, many businesses will continue to feel the pressure.
Ultimately, minimising the impact of the end of JobKeeper will come down to getting the right advice and taking prompt action so your business can adapt accordingly.
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