The Covid-19 pandemic has caused even the best-laid business plans to go awry. To maintain continuity and take advantage of new opportunities, owner managers have had to think quick on their feet to rapidly adapt strategies and ways of working. However, to avoid falling into financial difficulty, it is vital to understand how a change of approach could impact the company’s long-term cash position.
As well as needing to respond quickly to changing Government guidance, the past few months have seen a number of businesses pivot their focus in line with emerging market demand. For example several industrial manufacturers have supported the UK’s Covid-19 response by producing PPE and other related products.
what to look out for while changing plans
While changing the direction of the business may help owner managers continue operating during this crisis, they must also consider how this transformation could impact different areas of the company’s finances; an improvement in turnover may not necessarily mean that it is profitable if the costs have also increased.
Once organisations decide that a change of plan is needed, expert advice is essential to learn exactly what this means for the business’ numbers. This is especially true when branching into a new sector, which comes with its own unique risks and opportunities.
Protecting cash flow and assets
Protecting the company’s cashflow and assets should also be a priority. As well as looking to call in any debts at the earliest opportunity, while agreeing favourable payment terms with suppliers will help to protect the company’s reserves as it grows. Equally, if the business is struggling to make payments, clear communication at an early stage is vital. Although it may be tempting to clam up when times get tough, reaching out to creditors to discuss a future plan of action will help breed trust and keep your all-important brand image alive.
Change is some times essential
During uncertain times, ‘sticking to the plan’ isn’t always the best policy and the ability to respond to market changes may make businesses more profitable in the long run. With the right support and by keeping a careful eye on their cash position, owner managers can demonstrate their agility while avoiding financial failure.