The other day someone asked why I was so calm and seemingly unflappable in these crazy COVID times. I smiled.
Am I concerned? Of course I am. But you see, when you decide to venture into business, it would be remiss and even naïve to think that it will always be rosy. As a matter of fact, if you are truly doing business, then you must know that it is a constant battle. Agitations, tantrums and nervous breakdowns don’t help you through. The calm helps you assess and make the important next steps.
Understanding that the environment of business is flux filled, discerning business owners conserve as much as they can when the going is good, because there will be times when the reserves will be needed to tide over the storms. The storms do not last forever. The mistake is to eat all you have in a particular period because you believe you will make the same amount or even more in the next period. This is another reason why as accountants we are always preaching budgeting.
You see, if it wasn’t COVID-19 today, it could have been something else. It could have been an unprecedented invention making your product or service obsolete, it could have been death of key stakeholders in the business, it could have been an adverse government policy, it could have been anything. After COVID-19, there will be many more storms! That is the environment of business. It is as unpredictable as it is enabling.
Now that you are faced with COVID-19, and you were totally unprepared, what do you do?
Your first action is not to fire your staff! This, in my opinion, is always the easy way out. The reason why I never subscribe to this as a first resort is that there are other elements to your total expenses. You do not want to give the impression to your work-force that human resource is dispensable, because when the storm is over, you will not attract the right kind of talent, seeing that your bad reputation now precedes you. In dealing with human resource, you need to know that whatever strategies for growth you want to execute, you will need the right kind of human resource to implement them. Making your staff priority during the storm is how you consolidate for growth in the aftermath. It is true you may have to explain delays in payment, but it is only a temporary situation.
Salary is just one item in your Statement of Profit or Loss. You need to know what the other components of your total expenses are, then make the decision to cut down as much of them as possible in the coming months. For instance, if you are still thinking of spending on a huge vacation later this year, you need to scale down that plan considerably and plough that money into multiplying revenue and consequently net profit.
Also, now may be the time to evaluate your inventory position and set a plan in motion to clear out all slow moving items by cutting down selling price. You need the cash to be injected into fast moving items. Yes it is a temporary loss, but you recover it by turning around that freed up money as much as possible.
After the storm, you need to expand your playing field. You have stored up energy in the lock-down, so you need to run as fast as you can, collaborating with individuals and businesses that will give you a wider reach and make as much money as possible, so you can conserve it!
Remember, there will always be storms, so do not eat all of your harvest! The saddest thing that can happen is for you to forget this lock-down period in a hurry and repeat the same mistakes of not conserving for the rainy day.
Multiply and conserve. That should be what we keep in the fore of our mind going forward.
It is okay if you have lost income now. A temporary loss of income is not the end of your business. What you must do is to keep your mind alert and prepared for the next open window. Then you must run as fast as you can, because there will be another storm yet. It’s business; what else did you expect?
Cheers to immortalizing your business!
Jovita Madojemu
