Ahead of the Curve
These past few weeks have shown us, once again, the importance of planning and reserves.
These are the things that truly set us up to do our best when we have to make tough choices.
The tools that will set you up for effective decision-making are having current financial statements and a dynamic plan. The reason I call it a dynamic plan is because it is a fluid document. It is one you can adjust in real time based on what is happening in the moment.
It is highly likely that you did not plan for a pandemic this year. Faced with this unexpected and extremely challenging situation; now in the face of it you must be able to make decisions about how to move forward. It is not a time to freeze, nor is it a time to make decisions based on emotions.
First, you must know where you are today. Do you have reserves? If so, how long can you make them last?
What are your numbers that will be impacted the most? Will it be the top line? In other words, will your revenues drop? If so, to what degree might they drop? Are there ways you can pivot and create different streams of income in light of what is happening in the market right now?
What expenses will be necessary to keep? What does it make sense to release? The SBA and Paycheck Prevention Act are two resources that may help to guide you about which expenses to change and how. You can learn more about them here.
There may be places where it will hurt to cut, but you want to be sure you are not cutting things that will cause more long-term pain than is necessary. Having a Dynamic Plan is one way to pencil through future scenarios and know just how long you can operate with and without certain expenses.
We have been through times like this before, and I am confident they will come again. I know in my own business the economic down turn of 2008 is where I truly learned how to implement these tools so that I know I can adjust in the face of anything that comes my way. It is what we teach our clients as well.
Take some time to think about the principles that will guide you in your financial decision making.
What is most important to you in your business and in your personal life? What is non-negotiable and where will you adjust?
We are here to help, so feel free to reach out with your questions to firstname.lastname@example.org and we will do our best to address them here in the following weeks.