I think we can all agree these are uncertain and unprecedented times, many individuals and businesses are facing circumstances they never considered possible. As I scroll through social media I see families struggling to buy food, businesses closing with no certainty of when they will be back, artists and performers suddenly with no income and small businesses imploring people to please keep supporting them.
If you had asked any of us if we could have foreseen where we would be 6 weeks ago I doubt many of us would have been able to see this. It can be easy to feel dragged down in the worry and anxiety especially when it comes to finances.
I’d like to give you some positive focus, a simple 3 step process that you can work through to reassess and strengthen your financial position.
- Review your services and products – now is the time to be adaptable with your offerings to the world. It’s not the time to be complacent and keep doing things the way you have always done them. There are many of the services and products that we offer that can be realigned to work in the online world.
Here are some questions you can ask yourself:
- What can be changed to suit the current environment eg going online, creating evergreen content or changing the processes?
- What can you continue to provide and what do you have to let go of? Some of this may be a permanent shift or it may be just for the time being. Focus your time now on the activities which you can offer and consider the impact changes will have on your income.
- What else can you add in to encourage an injection of cash into your business? Maybe you have old stock you can sell at a discount or that guide you have been meaning to put together as evergreen content on your website. Start thinking creatively about what you can offer the world right now that will benefit them and you.
- Do you have expenses associated with the income that you are losing that you can get rid of? eg subscriptions, cost of sales, contractors. A product or service which incurs a lot of expenses may be worthwhile cutting right now especially if the income from it is expected to decline.
- Review your outgoings – where can you start to trim expenses that you no longer need or can do without temporarily?
- Review subscriptions (I managed to save over $500 just this weekend alone by doing this). A useful thing can be to go over your credit card and bank statements and make a list of all the subscriptions that currently come out of your account without you even thinking about it. I guarantee you find at least 1 that you no longer need or which you can use the free version for the time being.
- List your needs vs wants – be brutal here, can you live without it? If the answer is yes, it’s a want and you can consider letting it go. (hot tip: Netflix is a want, there are plenty of ways to access free tv and movies legally)
Is there a cheaper service provider/ plan/ system? Shop around and see what else is on offer. A sneaky trick is to start the process of cancelling subscriptions and when asked why select ‘too expensive’, many times companies will offer a cheaper rate immediately. Or why not call your provider and ask them what they are doing at this time to lessen the load. Do not underestimate the impact that this can have on your finances.
(please note: try and apply this to big corporations and not your local small business, they are already doing it tough!)
- Is there a free version from that provider or a different one completely? Maybe you disregarded it previously because it didn’t have all the bells and whistles of another option. Can you forego these things now to save some money?
- Assess your position – each single step above will have a different impact on your financial position. Whilst it may take more time and effort on your part look at the ‘if x then y’ scenario of each financial decision. Some are no brainers eg if I cancel that magazine subscription which I never read I will save $30 a month, easy! Some are harder ‘if I change my phone plan I will save $10 per month but I lose 10GB of data which I sometimes use’.
It is also vital to look at the financial risks that you may be facing in the future as well. We have already seen widespread closures of many businesses but what are we facing in the future? The threat of lockdowns keeps rearing its head for businesses in Australia. Here are some questions you can ask but I would encourage you to spend some time considering your unique situation:
- If you rely on an in-person trade what will happen if that option is taken away?
- Are you at risk of supply issues? What will happen if your supplier is forced to close?
- Does your insurance cover illness contracted within your business?
- What are the risks for your unique business?
- Can you survive with an income cut of 20%? What about 50%? What can you do to ensure that you can survive?
Redo your forecast and be realistic. Look over each of the possibilities you can change and assess the bottom-line impact each will have as well as any risk you face in the future. Try and remove emotion from your decision, which is probably the most challenging thing. Remember, you are doing what is in the best interest of the business.
Still need more help to get your finances in a healthy state so you can weather this storm? Sign up for a Financial Health Check, in light of recent events I have reduced the price heavily to make it more accessible.