(Benjamin-Franklin-on-a-dollar-bill-wearing-a-mask) Covid-19_business-owners-need-to-change-financial-budget-and-business-plan Rolf Neuweiler, A2ZCFO.

A Crisis Calls for Changing Financial Budget and Business Plans

The world today is very different than it was 6 weeks ago. Before the Covid-19 lockdown, the U.S. economy was strong, the  bull market was high, and unemployment was low.  As our economy is slowly and gradually opening up, we are facing unprecedented unemployment, business closures, large numbers of people working from home, and many changes to the New Normal  that we never imagined. Unless you are one of the lucky few, your business has been negatively affected.

Revise financial budgeting and business plans to meet the new challenges

To survive any crisis and to thrive in a new business environment, those who adapt fast, win. 

  1. It is time to update your financial and business plans.  
  2. You will need to triage your business to understand your cash flows and survive the current crisis.
  3. You need to determine and focus on the essentials for your core business(es).  
  4. You need to update your budgets now. 

What to keep, discontinue, and add in this New Normal

To determine how Coronavirus has affected your business, you need to specifically analyze the following:

  • Evaluate what products, services and operations should continue and which should cease.  
  • Determine what new products or business operations that you need to add, if any.
  • Ascertain related costs for the redefined core business.
  • Develop plans for current economic decline, turn around, and various economic recovery scenarios.

In addition, list all COVID-19 specific expenses versus normal financial budgeting operational costs:

    • Additional staffing costs – overtime, sick leave, free meals, temporary staffing, layoff
    • Additional security and IT related costs
    • Expenditures that can be reduced or deferred.

Cashflow is paramount

Emphasis cashflow over your accounting income, as you may have income that will not convert to cash quickly or ever.  Expand your business model to include all sources of cash including:

  • Governmental grants and loans and/or other funds, and payroll credits
  • Best ways to use the above grants, loans, funds and credits,  and track them carefully
  • Traditional bank loans, if needed
  • Other types of capital raising, if needed.

Exit plan for a business and for an individual

Be sure to address the longer term also.  What is your company’s new focus, as we return to the New Normal?  If you were considering selling your company in the near future, do you want to sell it now and not work through a turnaround?  If you want to sell in a year, you may be better off to sell now instead of working through 3-5 years of recovery.  For those who want to take advantage of early retirement, is now better timing than some years later?

Like all disasters and economic depressions, this too will pass, as painful and difficult it will be.  Developing and updating your new business plans for the changed reality caused by Covid-19  is critical to help you get through this economic upheaval.

 A well thought out financial budgeting plan will go a long way to navigate these unusual times.

A2zCFO, both the Right and Left Arms for your organization:

A2ZCFO takes pride in helping small business owners prepare for either storms or calm weather, and navigate safely through rough waters. As a consulting CFO, I help business owners and management to “keep your ship on course.”

  • We help with any aspect of financial management from A to Z. 
  • By providing trusted financial advice, I create financial and goal clarity, resulting in increases in cash, profitability and sales all the while preparing the business strategically for a successful exit when the time is right.
  • Works at client’s location and directly with client’s staff;
  • Affordable and flexibility in hours – 4 hours a month to short term full time assignment;  
  • Excels at messy and difficult clean up situations;
  • Meaningful financial reporting for management, bankers, and CPA’s.  Tax returns completed by 4/15;
  • Cradle to grave services – from bootstrapped startups to exit transition service experience.

Please call me (925) 216-5058 or email:  rolf@a2zCFO.com

A2Z CFO, we keep your ship on course.

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