How do we deal with so much uncertainty?

Virtually all the businesses we deal with are massively worried by

a) the total uncertainty of how this thing will play out,
b) the rate of change, and
c) the financial consequence and impact on their businesses. What was monthly, became weekly, and is now hourly. Where will it end? Are we out of control?

I’ve already indicated that I am a ‘glass half full’ kind of guy and I am latching on to the following;

  • Absolutely no-one wants our economy to fail. In fact the energy that is being expended (despite the counter forces) to help it succeed are colossal. Access to loans of up to £5m, backed by the Government (not you), where the Government pay the interest for the first 6 months, is one such example. It’s unprecedented and there is a promise of more to come.
  • Everyone wants to return to ‘normality’, or a version of it. Currently we are all standing on the edge of a cliff and it’s crumbling under our feet. We would give anything to take just a few steps back.

Build a plan for 90 days – we can help with this

The feedback I am hearing from a lot of people is ‘I really don’t want to borrow any more money’. Neither do I. However, I feel it is absolutely vital that all of us build a plan of how we think this thing will play out for us. It’s a near impossible task, but it is achievable. This is how I suggest you do it;

  • right now, all we are interested in is cash (profit and loss is not relevant at this stage)
  • cash can be divided into;
    • cash we receive, from sales
    • cash we spend on
      • wages
      • overheads
      • finance
      • etc
  • create the model with all the headings that you would normally use for all your sales/income categories and expense categories
  • in my opinion, the ‘forecast’ should be looking at increments of a week, and preferably the next 13 weeks (90 days)
  • ‘what if’
    • Income
      • we need to create the option to adjust income to consider various scenarios, so
        • what if – sales falls by 20%, or 60%, or whatever
  • expenses
    • some we can stop
    • some we can postpone
    • some we can reduce
    • some are non negotiable
  • Create scenarios that consider some of the above and how they change the outcome
  •  VAT
    • if you are registered for VAT, don’t forget to include the impact of VAT.
    • you may wish to contact HMRC and negotiate with them terms for payment, either staggered over a number of months or postponed
  • PAYE – the same goes for PAYE

Having done the above, and if you have done your sums and formulae correctly (we are happy to help with every stage of this) you will get an indication of whether or not you are going to need funding to help you through this period.

This forecast should be updated every week and pushed forward another week (so that you are constantly monitoring the next 90 days – we call this ‘the bow wave’).

The intention is to determine what it might cost you to run your business over the next 3 months (of course, I understand that this situation may last longer), and then determine whether or not you have an appetite to borrow the funds that you will need to do that. This will be the Government backed finance.

And of course, if you don’t have the appetite, then it’s important to consider what other options you might have.

Whether you do this now, or in a couple of days, it’s SO important that you do it.

We are more than happy to help and we can send you a draft cashflow template should you need one. Once you’ve done it, send it over and let’s talk it through. Don’t bury your head, this is important.

Happy to be contacted by any means;
  • Landline – 01326 660022
  • Mobile/WhatsApp/Text – 07779799995 – Mike Hutchinson
  • Zoom – ID 205 677 7765 – Mike Hutchinson