Did your dream of starting a business seem difficult even before the pandemic? During the crisis, your existing business may have been ripped from your hands in an unforeseeable and helpless manner.
As a 30-year business attorney, I have seen plenty of businesses both succeed and fail. As a result, I would do a disservice by failing to acknowledge the devastating impact COVID-19. As I write, I fully realize that some reading this are aspiring entrepreneurs whose dream business funding has vanished. Likewise, some readers have existing businesses that have or will succumb to the impact of COVID-19.
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Let me suggest three important areas of focus to consider when restarting your existing business:
- Consider current relationships
- Consider current business operations
- Consider financial needs
Consider current relationships
The coronavirus most certainly changed the world, and with it, our collective values. A recent study by Win Big Media assessed consumer sentiment in the U.S. and from those surveyed, showed the top three values of customers today:
- Helping and caring for family and friends
- Preserving safety for self and family
- Being dependable and trustworthy for family and friends
If these are really the top three values in customer’s minds, are you and your business serving these values? How about your service providers? How do those you and your business depend on meet these values?
Here’s an example: one of my clients owns an independent clothing store. During one of our recent phone calls, she explained how she has altered the focus of her business. Now, all of her employees focus on making each customer feel safe and secure when they enter her store, a practice that has boosted customer loyalty more than ever before.
As you begin to reopen, focus first on the most important relationships in your business, and that focus will be a great investment of your time.
Consider current operations
Most of us are familiar with the “80/20 Rule.” That is, 80 percent of your revenue comes from 20 percent of your existing customers or clients. Over the years of practicing law, I find this rule to be a virtually universal fact; and now is the time to make any necessary adjustments to meet the needs of your customers or clients.
When it comes to your operations, are there any areas that you can adjust to better serve the newly discovered needs of your existing customers?
Make every effort to show that you sincerely care for your customers and their wellbeing. Ask them how you can improve or alter your services and/or products to meet their needs during this difficult time. Then, consider altering your business plan and operation to meet those needs and wants.
Consider financial needs
The three most critical financial components of a business are revenue, expenses and cash reserves. As you consider what your business will look like post-COVID-19, use your best efforts to conservatively project your future revenues.
Primarily focus on cash flow. Ask yourself the following questions:
- How has the virus affected revenue?
- How has the virus affected the expected time for customers or clients to pay accounts receivables?
Then, project your expenses on a month-by-month basis. Again, ask yourself:
- Can a portion of those expenses be addressed through funding assistance?
- Can you cut any expenses?
- If you received a PPP loan, would cutting some expenses be counterproductive because they make a portion of the loan forgivable?
- Can you lower proposed inventory and/or return some inventory to long-term and faithful vendors?
- Can lease terms be improved or modified?
- Take a look at your staff—can you alter any responsibilities to make your business more efficient?
Finally, determine your level of cash reserves. Ask yourself:
- Do you have sufficient cash reserves? If not, do you have assets to sell or leverage for cash?
- How will you address debt going forward? On the other hand, is finding an investor the best alternative?
Now is a great time to restart your business
Today, without question, entrepreneurs are facing a strong headwind, and it’s one that will be recalled throughout the ages. Nevertheless, when considering these struggles and how you’ll reopen your business, ponder the following quote from Henry Ford:
“When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.”
I never know how things will get off the ground, but they do. And you can, too.