Think like an Established Business or a Start-Up?
Sunday’s announcement showed a desire from the Government for business owners to either restart or start planning to restart their businesses depending on what sector you are in. But just because that’s their desire doesn’t stop you from needing to ask yourself what is right for you.
Every business is different, even within the same sector situations vary so there is no “one size fits all” approach. As the owner of your business you need to be asking yourself all manner of questions, including:
- Just because you can restart now/1st June/1st July, should you restart then?
- Are your customers actually opening their doors as well at this time?
- How will you attract those customers back?
- Are your suppliers able to deliver the stocks and goods you need?
- How will social distancing work in your business and will it reduce your capacity for turnover?
- Is it worth waiting until ordinary operations in the country are more “normal”?
- Is it worth opening?
The last question should be thought about very carefully and will be a culmination of all other points being considered. A director of a company must always have in mind their duties to act in the best interests of the shareholders and the creditors. You should not knowingly incur credit that you believe will not be paid. It is a very real possibility that your business will not be making the profits that it did before the lockdown and possibly will be making losses for the first few months of trading.
If you are not comfortable that you will recover and make enough profits in the long term to make up for the losses being incurred, you should already be speaking to us about your options. However, if you think the business is strong enough to bounce back, then keep reading.
You should be thinking how you are going to cover the extra costs of bringing staff back and replenishing stock when turnover may not bounce back. Do you need all of the staff? Do you need all of the overheads you previously had? What is the plan for the next 6 to 12 months? If you are going to increase your costs by £10,000, will your sales increase by at least this much?
These questions may all sound familiar to you and they should. These are the thoughts of every person when they initially start their own business and they are planning for growth and the future. You have an advantage over start ups because you have an established business and you have experience. However, I would guess that you also have a lot of costs and a lot of bad habits. Now is the time to get back to that Start-Up way of thinking.
Think like a Start-Up
Consider all aspects of the business. Are you as lean on costs as a start-up would be? Do you really need to spend as much as you do on non-essentials? Would you have that many staff or as big a premises if you were just getting going? Being leaner on costs will make the cash last longer and give you the best chance to survive, and grow again when the future is more certain.
It is time to get back to the drawing board and rethink where the business is at. Think of new strategies while you have the time and you are already having to deal with new ways of working. The old ways are not always the best and there are plenty of things you can do now to try to seize those new opportunities.