How Small Businesses Become Successful

What’s the secret formula to small business success?

We know that might be a loaded question but we have a few strategies up our sleeve that we know work. The overnight success of Facebook and Uber isn’t the same way most small businesses experience success. It’s critical to keep in mind that everyone’s journey looks different. Let’s explore the various ways your business can become successful and continue to grow and thrive, and what counts as a successful business.

Success or failure? And the in-between. 

There are two main ingredients to American overall business outlook that are admired by the rest of the world. These are:

  • Enthusiasm for the future and making things better through a business
  • An openness and willingness to change and adapt to accomplish goals

We should hold on to these! And there are other elements that go into a successful small business, such as an owner with determined organization and detailed record-keeping and a commitment to delivering good, reliable services to customers that become loyal (to name a couple).

Small business owners are all different, but we all share common skills that help contribute to your success. Persistence, patience, and commitment are all attributes apparent in business owners. And let’s face it, it’s hard to survive in entrepreneurship without those three traits. A positive attitude toward your business, and life in general, contributes to resiliency. You know better than anyone that it requires sacrifices in your personal life when establishing a business (balance….what is balance??). But, good planning and organizational skills, with a dose of flexibility and strong analytical skills, will help direct you down the path to successful small business ownership.

Setting a strategic business plan that clearly describes your business concept, mission, and philosophy will absolutely ensure you start off on the right foot. And setting personal and business goals is important for motivation and measuring success. A proper business plan should detail specific strategies and timelines to attain goals. At the outset and for continued success, be aware of your competition and either appropriating or improving upon their successful tactics.

A well-developed organizational structure will help you work toward the same goals. Your organizational structure should inspire all employees to perform to their utmost capabilities and reward those who excel in their contribution to the business. Just the same, your structure should allow for corrective actions and discipline should employees deviate from acceptable behavior. As part of your organizational structure, business owners must define positions, tasks, duties, and responsibilities and routinely measure performance. *Key takeaway: Everyone preaches it, but you must also practice it: Employees are your most valuable asset!* Treat them as such with ongoing training, job enrichment programs and incentive compensation. Listen to the type of recognition they want – and follow through. It’s also important to understand their learning style and what communication model motivates them to succeed. This is made much easier at CEFO Advisors with the help of the CultureTalk Survey System, which unlocks the archetypal patterns in your organizational culture and the individuals who influence it. We like to call this our secret sauce!

Both financial and nonfinancial, and whether manual or automated, an operational support system makes activities of an organization efficient and relieves management of many day-to-day routine activities. A solid support system will allow small business owners to be strategic thinkers and track critical information on sales, cash flow and other financial performance data. Afterall, that’s why you’re in business! This ensures owners become aware of red flags before the problems become unmanageable.

How long will it take for a small business to become successful? (Spoiler: The 4th year is when “overnight successes” are discovered.) 

Most small businesses take 2 to 3 years to be profitable and 7 to 10 years to be “successful.” The truth lies in the statistics: approximately 20% of businesses fail in the first two years, 45% fail in the first 5 years, 65% fail in the first 10 years and only 25% of small businesses are successful after 15 years or more.

For patterns that may foreshadow success, read on.

  • Year 1: In the first year, there should be many small successes in getting the company off the ground. These may include starting a website, gaining social media attention, growing a client list, and being able to pay personal bills from early profits. Making it through the first year puts you in the 80% of successful businesses.
  • Year 2: Initial success may begin to wear and cash concerns or dwindling capital may lead owners to borrow money this year. Be sure to not allow the stress of debt to run your business though. Instead, realize early customers are not necessarily long term. You should start to see opportunities for expansion during this second year.
  • Year 3: This is the year that fine-tuning begins. Breaking even or making a profit shows you’re headed in the right direction and you can see the light at the end of a tunnel. Figuring out which areas of the business can grow and recruiting a solid team to help you get there should be part of your plan. Get more sophisticated by planning for risk, working on leadership, and analyzing the numbers (including where expenses can be cut and what customers are driving business).
  • Year 4: This is when overnight successes are actually “discovered.” You may still be plagued with small steps forward and sometimes steps backward, but you’re honing in on what is successful within the business. You’ll have sharper brand positioning and improve marketing that leads to a refined customer acquisition process. Your management team will be more efficient in operations and you’ll produce better products. You’re figuring out what customers really want.

You made it through the hard stuff. Now what?

 

To keep making forward progress and grow your business, try these pro tips to take it to the next level:

  • Build word of mouth for your business. Encourage advocates to share their experiences and honestly respond to negative reviews.
  • Focus on customer service. Simply put, it will set you apart. The way word travels, you don’t want to be on the wrong side of it.
  • Expand your marketing efforts. There are so many avenues to market (so it can be overwhelming), but the best way to expand your efforts is to test.
  • Build your online presence. It’s where business happens now. Even if you’re a brick-and-mortar retail store, consumers expect to be able to learn more about you without leaving home. (This is especially important in these pandemic times.)
  • Go mobile. Being digital is only the first step. Ensuring you can be found from a smartphone is the next – otherwise you’ll miss out on a huge customer segment.
  • Cut your business costs. In the same way added revenue contributes to more profits, so does decreasing your expenses. Take a good, hard look to see what you can eliminate.
  • Get in the cloud. Digitizing your business gives it a competitive edge and makes life easier for owners and operators.
  • Hire and retain the right employees. You’ve heard it before: Employees are your most valuable asset – this is especially important in small businesses. Don’t settle. Be sure they’re a good culture fit and someone who has an interest in contributing to your businesses’ future success.
  • Update your business plan. Just like people’s preferences change, so must your company. Start with amending your plan.
  • Stay balanced. It’s easy to get burnt out being a small business owner. You’re often wearing multiple hats. It’s important to take time away from the business to recharge.
  • Make this year your best year ever! Take time to re-energize and focus each year. Recommit to your business. Business ownership isn’t easy but renewed passion will get you through.

At CEFO advisors, we partner with our clients to help them become the successful small business owners they aspire to be. Through our business philosophy of strategy, finance, and culture, we have been able to better help our clients understand how our business works and how they can be successful using a similar strategy. Join us today.

 

 

FreshBooks. “How Long It Takes for a Small Business to Be Successful: A Year-By-Year Breakdown.” FreshBooks, FreshBooks, 23 Oct. 2019, www.freshbooks.com/hub/startup/how-long-does-it-take-business-to-be-successful.

Normand, Robert A. “4 Reasons Why Small Businesses Succeed.” Business Know-How, Business Know-How, 16 July 2019, www.businessknowhow.com/startup/succeed.htm.

Seabury, Chris. “9 Tips for Growing a Successful Business.” Investopedia, Investopedia, 16 Sept. 2020, www.investopedia.com/articles/pf/08/make-money-in-business.asp.

 Ward, Susan. “Here’s What to Do to Make Your Small Business More Successful.” The Balance Small Business, The Balance Small Business, 4 Dec. 2019, www.thebalancesmb.com/how-to-make-your-small-business-more-successful-4060804.

Pivotal Business Year

How Are You Dealing in This Pivotal Year for Small Business? 

For the rest of history, 2020 will likely be known as the year of the COVID-19 pandemic. Although outbreaks, like the 1918 Spanish flu and 2014 Ebola epidemic, are remembered in history books, we never really hear about the economic and social consequences that came along with them – or how society came together to rebuild. What do you think will be the story that goes along with this last year’s challenges?

I am so grateful to have such an inspiring and tight-knit team at CEFO Advisors, and even with all of the challenges 2020 threw at us, we emerged stronger than ever. With the ups and downs of the pandemic, clients pivoting and evolving and personal challenges, it was not an easy year but that doesn’t mean we didn’t move into 2021 with new lessons and a greater appreciation for what we have.

As the coronavirus pandemic rages on, business trends have changed greatly – from remote work and consumer shopping behavior to global advertising spend and essential industries (like food, medical, travel, and transportation).We even saw new businesses emerge and many businesses thrive during this time. Who else has taken full advantage of grocery delivery?? As a small business, how have you been affected? And who can you partner with to help keep your business thriving – or surviving?

Let’s talk about the economic consequences of the coronavirus pandemic. What resources are available to overcome this economic downturn? The repercussions may not yet fully be known, and long-term ripple effects may surprise us later on. But here are some actions we can take as small business owners to stay in business now and prepare for the future! 

How can small businesses fight back against the pandemic?

According to JPMorgan Chase, more than 99% of businesses in the U.S. are small businesses and these companies employ one-half of the population. Small businesses often operate with a lack of cash reserve so many can’t deal with a month-long interruption – and the pandemic has carried on for more than eight months at this point. This has resulted in job cuts, financial strain and failing businesses.

The initial outbreak in China in late 2019 disrupted the global supply chain and global economy. Then the week of March 14, 2020, saw 3.28 million Americans file for unemployment in panic that followed the spread of the virus. Companies that have been most affected are hospitality, travel, restaurants and bars, and construction. The fear heading into the future is a greater possibility for start-up depression as well: a lack of new companies being founded and growing the job market.

To combat the effects of the pandemic, here are some steps to keep you moving forward:

  • Assess your essential functions to best prepare for continued stressors.
  • Dedicate time to planning (the best you can) to make sound business decisions.
  • Accommodate changing consumer culture by adjusting your offerings and service as needed.
  • Continue providing a healthy work environment and supporting employees through the pandemic. Follow the Centers for Disease Control and Prevention (CDC) outline for employers and employees, including daily health checks, hazard assessments, facemask regulations, social distancing, and ventilation recommendations.
  • Consider outsourcing a chief financial officer (CFO) or certified public accountant (CPA) to do realistic accounting. CFOs/CPAs can provide access to new, recurring revenue and maintain free cash flow by creating a year-round paid relationship. Your business will no longer have to rely on the seasonality of tax filing. It will allow your business to become more profitable, promote growth, and achieve business and personal goals.

How can you secure funds to get through hard times?

Yelp estimates that more than 132,000 businesses on their platform have closed since the introduction of pandemic, and more than half will not reopen. Spikes in cases have caused the reclosure of many small businesses that did reopen. And most businesses that have reopened are just breaking even or are in “survival mode.” They are getting by on the bare necessities and have had to take on additional expenses, like personal protective equipment (e.g., air filters, hand sanitizer stations, gloves, plexiglass shields).

But there is some help! Government grants are available for small businesses, offered by federal, state, and local governments. A small business grant is free money given to a small business (with fewer than 500 faculty per location) to help launch, develop, or expand. Government grants are usually given in phases (typically three phases in two years) to support businesses in the long-term.

Federal government grants can be found online at:

  • gov
  • gov
  • gov (U.S. Small Business Administration)
  • gov (U.S. Economic Development Administration)

Part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which is the main stimulus for small businesses, is the Paycheck Protection Program (PPP). More than $659 billion has been funded under the Small Business Administration (SBA) for the CARES Act. Specifically, under the PPP falls the Business Loans Program Account, which provides business loans to cover up to eight weeks of payroll, as well as other costs to help small businesses stay afloat.

PPP resumed April 24, 2020, following approval for funding by the U.S. government. Loans under PPP are available for companies worth less than $10 million or 2.5 times a company’s average monthly payroll. Every cent of a PPP loan can be forgiven if specific spending guidelines are followed. The passage of the PPP Flexibility Act 2020 relaxes many previous PPP loan guidelines as well. Both PPP and economic injury disaster loans (EIDLs) are available for small businesses; you can apply for both directly through SBA-approved 7(a) lenders.

With the new wave of funding for the Paycheck Protection Program comes questions and uncertainties, but CEFO Advisors is here to help you and your business!

Sign up for your free consultation with CEFO Advisors for help with the second round of PPP for your business. We’ll help you with:⠀

– Identifying if you qualify for PPP⠀⠀⠀⠀⠀⠀⠀⠀⠀

– Navigating the application process⠀⠀⠀⠀⠀⠀⠀⠀⠀

– Educating you on what qualifies as an acceptable expense for PPP funds⠀⠀⠀⠀⠀⠀⠀⠀⠀

– Filing for forgiveness⠀⠀⠀⠀⠀⠀⠀⠀⠀

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Reach out to lbenson@strategiccforesources.com to begin the process.

 

Alexander W. Bartik,  Marianne Bertrand. “A Way Forward for Small Businesses.” Harvard Business Review, Harvard Business Review, 14 Aug. 2020, www.hbr.org/2020/04/a-way-forward-for-small-businesses.

Brown, Courtenay. “Small Businesses Are Spending to Reopen, Even as More Coronavirus Shutdowns Loom.” Axios, Axios, 27 July 2020, www.axios.com/small-business-coronavirus-expenses-87b59746-7a44-45e8-b1d9-3c6e56735b1a.html.

 “Coronavirus Business & Economy Impact News.” Business Insider, Business Insider, www.businessinsider.com/coronavirus-business-impact.

“COVID-19 Forcing CFOs to Become Change Agents and Strategists.” StackPath, 31 Aug. 2020, www.cpapracticeadvisor.com/accounting-audit/news/21152345/covid19-forcing-cfos-to-become-change-agents-and-strategists.

 “COVID-19 Guidance: Businesses and Employers.” Centers for Disease Control and Prevention, Centers for Disease Control and Prevention, 6 May 2020, www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html.

Probasco, Jim. “Paycheck Protection Program (PPP).” Investopedia, Investopedia, 29 Aug. 2020, www.investopedia.com/your-guide-to-the-paycheck-protection-program-ppp-and-how-to-apply-4802195.

Rushton, Charlotte. “Advisory Services in the Pandemic: A Mutually Beneficial Right Thing to Do.” Accounting Today, Accounting Today, 17 Sept. 2020, www.accountingtoday.com/opinion/advisory-services-in-the-pandemic-a-mutually-beneficial-right-thing-to-do.

Schooley, Skye. “Government Grants for Small Businesses.” Business News Daily, 10 Aug. 2020, www.businessnewsdaily.com/15758-government-grants-for-small-businesses.html.

CEFO Advisors welcomes new CFO, Tim O’Connor

CEFO Advisors is excited to welcome Tim O’Connor to the team as CFO. Tim brings over thirty years of experience in finance and operations leadership to CEFO Advisors, and has worked across varying industries. Tim will be working with clients on financial oversight, help in the development and understanding of KPIs that lead to continuous improvement, and provide support for their growth and expansion strategies.

“I am excited for this opportunity to join the CEFO team. They share my passion for helping companies reach their full potential. The emphasis is on being a true partner with every client. We are able to offer a support system that is designed to fit the needs of each client and their respective cultures. One size truly does not fit all, and we recognize and embrace that,” O’Connor said.

Tim’s experience in industries such as manufacturing, distribution/logistics, wholesale/retail, e-commerce, and multi-site entities will serve him well in his role with CEFO. “I have been fortunate to work for some great companies, who had significant growth and evolution while I was there. I also had the opportunity to work on the operations side of the business, which gives me a much better perspective when providing financial support to the clients. I have seen the business from A-Z and I am excited to use that experience to help growing companies continue to reach new heights.”

Why Hire a CFO?

Why Hire a CFO?

Many businesses reach a critical point in their growth where they need not only financial guidance but overall business guidance. As a small or midsize business, it’s not always feasible or even necessary to hire a full-time, internal CFO or financial team. In fact, as a business is growing they often only need specific support, at varying times throughout the year. It’s not only cost-effective to have a contractional CFO but a time hack as well for busy entrepreneurs.

We recently had the opportunity to speak with CEFO Advisors client, Dave Borland of Grow Exceptional. Dave shared:

“As a business coach, I work with entrepreneurs and leadership teams of small to mid-sized entrepreneurial companies around the United States. While most of them can’t afford or don’t need a full time CFO, I often find that a business owner tries to elevate a bookkeeper into a CFO role, or worse, also takes the “CFO” role themselves while employing CPA’s only at tax time.

That’s often a disaster, as bookkeepers rarely have the financial education or strategy to be able to truly advise on the strategic level, and yet cannot afford to have a CPA around constantly. Real, growing companies moving out of the “mom and pop” stage have to have a true CFO, someone to regularly advise them on big financial decisions, to set up true financial best practices, and to find the best areas to maximize company profits.

In those times, I recommend CEFO Advisors. They are a staff of true professionals including CPAs and strategic advisors, and fill the CFO role affordably, part time and virtually. Best of all, my business owners get their life back. I trust them completely, and my clients have seen amazing results. “

To learn more about working with CEFO Advisors, schedule time with Founder Amy Roman here: https://calendly.com/aroman-6/30min

How To Attract the Right Investor at The Right Time

CEFO Advisors Founder, Amy Roman sat down with Palette Founder and Purveyor of Fun, Catherine Hover along with Palette Partner and Investor, Steve Gonick for an amazing conversation on attracting the right investor at the right time! We chatted about the role CEFO Advisors plays when identifying the right investor and building a relationship with them, as well as what you need to consider when moving forward with an investor partnership. Listen in and schedule an introductory call with Amy here: https://calendly.com/aroman-6/30min?month=2020-11

Plan your exit strategy now

Now might not be the best time to execute your exit strategy, but it is the perfect time to define it. From day one of your business, you should be thinking about how your exit strategy will look. If planning it seems daunting, you’re not alone. But it’s worth the time and thought, especially during this uncertain time.

The pandemic has shaken the very core of our economy. Whether you follow Nouriel Roubini (who believes that a depression greater than that of the 1930s will hit in the middle of the current decade) or George Gammon (who believes we’ve been in a depression since 2008), the facts remain the same: Economic uncertainty is real and now. But, being prepared will give you peace of mind.

In 2008, I was working on a merger with a large European company. It was moving forward seamlessly, until it just wasn’t. The day after Congress approved the $700B bank bailout, affectionately referred to as TARP (Troubled Asset Relief Program), the European company backed out of the deal. These things happen, and I wish I had the wherewithal then that I have now. It’s never too early to plan, track, listen and reserve:

  • Plan your exit.
  • Track the economic cues, such as gross domestic product (GDP), unemployment rates, interest rates and the stock market.
  • Listen to your advisors and mentors.
  • Establish a reserve that will tide you through six to nine months of expenses.

Before you can define a plan, you need to consider the current state of your business. Here’s how.

Define your story. Your story that existed on February 1, 2020, may not be the story you tell on February 1, 2021. That’s OK! Stop and evaluate your business. Craft a new story if you need to – and believe it, own it and win.

Know your numbers and key business drivers. How are you trending? What was normal six months ago versus what is happening today? Then ask yourself:

  • How resilient is your business?
  • Does your current value proposition resonant clearly with your customers? When was the last time you checked in on your customers?
  • Where are you burning cash? Have you set aside reserves to get through the toughest times? Have you secured an adequate line of credit? Are you in over your head? The time to find a lender and get a line of credit is always before you need it. Many lenders are being cautious and not lending as they did pre-pandemic.

Evaluate your culture. Communicate with your teams regularly. Be open and receptive to cues and nuances that something is not as healthy as you thought. Engage with a Culture Talk Partner to help measure your organizational culture. Awareness is key.

Hire an experienced Advisor to guide you through the process. A Certified M&A Advisor will help you define and understand how to get from today to your eventual exit.

You have spent years building your business, but have you thought about how you want to exit? Start defining it by asking yourself these questions.

When was the last time you had a business valuation prepared? If it’s been a while, you should consider having it updated. Then think about these questions:

  • How close are you to your ideal exit valuation? What do you need to do to get there?
  • Work with your advisor to put together your roadmap, including a five-year forecast and milestones and metrics to hit that forecast.
  • How have the current economic conditions affected your business? If you’re on an upward trajectory due to opportunities presented because of COVID-19, you may be better off exiting sooner rather than later.
  • Is your current business model sustainable? Do you need to change your business model to conform to the new challenges brought on by the pandemic?

What are your financial needs and expectations? Think about whether your goals are attainable. If you’re concerned about a second Great Depression, consider lowering your financial expectations or adjusting your planned exit timeline. It’s also smart to get outside advice.

What is your dream after you exit? Define it – and get excited! It may be closer than you think.

CEFO Advisors is located in Saratoga Springs, NY. We work closely with small business owners defining their exit strategies and hold them accountable. For more information, call Amy Roman at 518.693.7446 or email aroman@cefoadvisors.com.

Complimentary Session with CEFO Advisors PPP Expert

The forgiveness requirements under the Paycheck Protection Program are confusing and the SBA continues to make changes.

  • There are safe harbor rules that are in place which will help your business qualify for full forgiveness even though it may seem that you can not based upon the formulas in place.
  • What is your actual FTE count and what are the right dates to use to perform this calculation?
  • Which coverage period is more beneficial for you to use?
  • Did you use the funds properly?
  • When should you file for forgiveness?

CEFO Advisors wants to help you better understand the forgiveness requirements issued by the SBA under the Paycheck Protection Program.  We are offering a free 30 minute consultation with our PPP expert to small businesses looking for support.

*By signing up for CEFO Advisors complimentary PPP forgiveness sessions, you are also signing up to receive marketing information. *

PPP

The Current Picture of Your Business: What Are You Painting?

We can paint two distinct pictures to evaluate the progress of businesses as they begin to recover from the setbacks of the past few months. One would illustrate what the data, numbers and business results show. What is in the bank and on the books? And while it is always important for owners to understand this information, right now, creating clarity is critical. The second picture would show the people. This one may be more complex. As forced shutdowns changed our business dynamics overnight, the impacts on people have been profound. From employees and their families, to customers and the wellbeing of owners themselves, the moving pieces of the pandemic response have left an emotional toll. For business owners, it’s equally important that this picture become clear.

For me, one story that uncovers the impact hits close to home. My dad, quickly approaching 85, is a physician who, after retiring from his practice at age 70, continues to work reviewing medical files for the state. He loved going into the office 2 to 3 days per week. His computer skills were minimal and in his line of work, that used to be acceptable. Overnight, he was forced to learn how to use a Microsoft laptop instead of an Apple desktop computer, had to trouble shoot printing and navigate ZOOM meetings, and work within these new protocols without the benefit of an IT resource on stand by. He still loves his job, but the last few months have been a big challenge.

Like my dad, it’s the people inside our businesses that have had to learn to expand, grow and quickly shift strategies to insure survival and continued profitability. And, for the first picture to show healthy business results, how we paint the second one will make all the difference.

These dual skill sets — and the ability of business owners to strategically navigate them — will separate the entrepreneurs that come successfully out of this downturn and those that may need to close up shop.

Create your own luck.

When we get into economic crisis mode I commonly see business owners stop, freeze and believe their business will be safe if they just hunker down. They believe that it’s too late to create a disaster recovery plan. And while it is true that the best time to plan for downturns is during the good times, there is no time like the present to set the ship aright. I encourage you to focus on the potential hiding in the shadows. The pandemic has provided many businesses the opportunity to evaluate costs and strategies. I say opportunity because it has forced us all to take a hard look at our businesses and determine what functions are working well, what functions need some improvement and what functions are not working at all. This honest assessment needs to include a review of systems, customers and staff. This is a daunting task when times are good, i.e. pre-pandemic, we so often find excuses to put it off. And after all, sales cure all, don’t they? Or do they?

Evaluate your systems.

Can you get the right information/KPIs from the systems you have in place? Are your systems efficient? Consider that since you’ve been living with them, you may be like a frog in a pot of water… unable to recognize that it’s started to boil. You’ve gradually developed work-arounds that eat time and profitability, but you think the cost or learning curve of newer systems is prohibitive.

The best time to evaluate and make changes is NOW. Make sure that as you migrate, the systems you choose interface with one another, i.e., banking and credit card transactions should load into your accounting system continuously or through a push function. The same is true with timekeeping and invoicing systems, as well as marketing and sales software to track prospects and customers.

Choosing the right systems will save you much more than your initial spend. You will be amazed how much you will save over time in both dollars and staff efficiency. What could you achieve by refocusing your staff to higher-level tasks and projects? The ROI is likely much better than you think.

One way to solidify this new behavior and thinking is to measure the outcomes. Do they match or exceed your estimates? Does the benefit align with the expenditure? Did you select the right system for the right price and an appropriate amount of effort? Consider hiring an expert who understands your business and can help you choose the right, industry specific system.

Understand Your People

The relationships between businesses and people are intricate. And let’s face it; businesses need all kinds of people, from the right employees to strong leaders and a loyal stream of customers. Take advantage of the changes brought by the downturn to take stock of the people who contribute to your success.

Ask yourself; have I spent enough time communicating with my clients or customers? Do I really know how their businesses are doing? Have I checked in on their emotional state or the status of their families? Take the extra time to continuously provide value in every interaction. Be ready and willing to switch to a plan B, understanding how to be more helpful, whether that means special pricing, a payment plan or a reduced contract. When you show up as a partner and invest in the relationship, they will continue to be there to support your business as well.

Take seriously the contract you’ve made with your employees. Once they are hired, you have an obligation to ensure their gainful employment and support their ability to contribute to their family and personal needs. The pandemic has created new realities for almost everyone; from remote working challenges like my dad is navigating, to health fears and safety concerns, childcare obstacles and eldercare duties. It’s time to factor in the responsibility you bear for both their physical and psychological safety as part of your team.

Look for redundancies before you bring on new staff or bring your team back from furlough and remain aware of right-sizing workloads to create a sustainable balance for each person. That said, do be continuously recruiting for the future. This is different from overstaffing. Network for the future as your company grows or people exit, looking for new energy, ideas and skills in people who are a good fit for your culture.

And don’t forget yourself. We only have so much gas in the tank and when we run hard for 4+ months — it takes its toll. I think that’s where many business owners are today. Worn out, weary and with a tank that is on E. Take some time to slow down, step away, and truly give yourself some recovery time.

Know your profitability

Sometimes relationships with clients get in the way of making profitable business decisions. If you run a service business, there are specific metrics you need to track to measure the profitability of every client. What are those drivers for your business? If you are not sure, seek data from industry peers or financial professionals.

Begin by understanding what standard accounting reports and metrics tell the story of your business. Many owners are looking at the wrong line items, or focusing solely on cash flow as the key indicator of financial success. You’ll also need to customize reports that automatically pull data that track against the goals you have set for your team.

With this information in-hand, sort your clients/customers in buckets based on what you uncover; A, B, C, & D. As challenging as these decisions can be, you need a plan to migrate out of clients/customers in the D bucket. This is your least profitable business and it’s likely you need to free your time and energy for better-fit prospects.

For non-service businesses and those with multiple revenue streams, evaluate your profitability for each revenue stream. Work toward eliminating any revenue streams that are not profitable. Work smarter; not harder.

With these tools at the ready it becomes easier to read trends and forecast future earnings and profitability. Which, in turn, helps you to manage your cash and assets more effectively today. The sooner you get these things in place, the better you will recover from the current downturn and increase your chances of thriving in 2020. The business owners who make proactive, progressive decisions will come out on top.

What will your pictures show?

Fight for Your Business and Survive Coronavirus

The daily challenges of running and growing a business take the full focus of business owners. The hardest thing you’ve had to face most recently has centered around finding qualified help rather than how to manage employees remotely or put them on furlough.

I hear you. The forced changes to, and even temporary closure of, your business could well be the worst pill you’ve ever had to swallow as an entrepreneur.  But the best way to minimize damage is to face the hard realities head on. You need to reduce your exposure quickly. While this may be challenging to consider today, this crisis could actually push you toward healthy business decisions you should have been planning for all along.

If you had a contingency plan in place prior to the coronavirus, high marks for you. You’re among the business owners best positioned to come through this intact. Continue to work your plan and read on for additional tips.

Use the following checklist to institute changes and preserve your business:

  1. Cash is king. While it’s important all the time, it’s imperative now.
  • Prepare a basic cash scenario over a 3-month horizon to evaluate best and worst case outcomes. We start each of our clients with a 13-week cash flow analysis tool. CEFO clients live by this. With a minimal amount of training, you will be able to see your cash position at a glance, make adjustments and course correct as needed Please contact us for a complimentary, virtual training session to get your 13-week cash flow forecast tool set-up and customized for your business. While our offer is valid at any time, it is particularly important right now and we stand ready to help business owners in our community.
  • Immediately get on top of collecting receivables. This is always a best practice, however it could be a do-or-die strategy now. At the same time, remember that many businesses and individuals are sharing your pain. Review your accounts and be willing to extend grace periods and negotiate terms. Consider being pro-active and offering your clients a discount, using your 13-week cash flow as your guide. Pay it forward. Investing in the mutual success of your loyal customers builds strong connections and will benefit you in the long run.
  • Pick up the phone and begin an honest conversation with vendors, bankers, landlords and service providers. Negotiate a delay in payments or change in payment plans. Many lenders have already communicated these options and stand ready to work with you. They understand that cash conservation needs to be your first priority.
  • Temporarily change appropriate large vendor payments from check to credit card.
  • Delay your 2019 US federal tax payment. The IRS has extended filing six months and will forgive interest and penalties allowing you to “finance” your taxes due.
  • Suspend shareholder distribution payments.
  • Implement a temporary 10% or 20% employee pay reduction and as the owner, communicate you have led the way by cutting your compensation first.
  • Pursue grant or loan options from the SBA. New low-interest federal disaster loans for working capital were put in place last week specifically for small businesses and private nonprofits suffering substantial economic injury as a result of the coronavirus. Here is a link to review eligibility requirements and apply.
  1. You need a lifeboat strategy. Although the immediate crisis may recede in a few weeks to months the effects will be felt for much longer. Many of your assumptions about customers, sales cycles and revenue are no longer true. In some cases, you should even evaluate your business model.
  • Make an honest assessment of the minimal things you need to keep your company alive and what you need to leave behind.
  • Segregate expenses between direct (expenses necessary to produce goods or services) and indirect (general expenses necessary to operate your business). Attack the indirect expenses to significantly reduce or eliminate costs. Be sure to eliminate monthly costs for phone lines, data storage, software subscriptions and virtual planning tools for those who have left in good times or through necessary layoffs. If revenue starts to flow the day you reopen your doors, than a freeze on variable spending, such as hiring, staffing, marketing and travel, may do the trick.
  • Eliminate perks and programs that drain cash.
  • Evaluate your product and market fit for the ‘new normal,’ even though you are hoping that it is temporary. Can you change your delivery model to online? Can you provide consulting services via video? Do you need new sales messaging to address immediate points of pain that may not have existed last month?
  • Cut prices. We are all aware of customers that want to do business with us, but have not been in a position to purchase. When you are trying to keep afloat, offering significant discounts on products or services may be just the ticket. Use your 13-week cash flow analysis as a guide to understand how far you can go and still meet minimal goals.
  • Develop a contingency plan early to manage the worst-case cash scenario. For service businesses, the reality is that revenue may still come in the early days of the crisis, but slow to a trickle as weeks and months unfold. You will be able to see this in your 13-week cash flow. Unfortunately, it means that will probably need to stay in the lifeboat longer.

 

  1. Address staffing levels. Employees are your biggest expense; cutting them is often the most painful challenge. But if you cannot avoid layoffs, failing to act quickly could be fatal. Don’t leave it for last.
  • Plan, communicate and act with compassion. Be completely transparent. Your employees are scared, too. Your leadership skills and emotional intelligence will be under a spotlight and you need to get this right. You may also benefit from counseling on how to handle any layoffs from a legal perspective.
  • Consider job-share options for hourly employees if that works for your business. By reducing hours from full time to two days a week, employees may be eligible to collect several days of unemployment each week as well. This strategy could minimize their financial pain and keep them engaged until you are able to bring them back full time.
  • When considering whom to cut, keep your team and culture front and center. The reality for many businesses is that not all hires are created equal. One potential benefit of a layoff is the opportunity for a do-over on a hire that is a poor fit for your team, or someone who does not share the core beliefs that are central to your culture.
  • Reserve enough cash to offer two-weeks compensation to anyone you need to let go, if at all possible. This is another reason to act early.

 

  1. Preserve your culture. You worked hard during the good times to instill core values and behaviors as a foundation for your business. Lean on your culture now to guide you through the challenges.
  • Over-communicate and be consistent, using the core language of your culture as you consider and share important decisions.
  • Double down on teambuilding. Create opportunities to connect, share feedback and relieve stress. If you’ve made layoffs, don’t forget that the remaining people are grieving, could feel guilty and may be concerned that they are next.
  • Consider the personalities of each employee. Each will benefit from personal check-ins and may need direct reassurance and guidance from you.
  • Create a clear charter for moving forward.

At this early stage in the crisis, the only thing that we know for sure is that there are more surprises ahead. You may need to consider this list more than once as you navigate through new territory. Remember that you are not alone. But you are the one person who can stand up and fight for the survival of your business. And if you need assistance or have questions, please reach out to the team at CEFO for a free consult.