Now we are over the shock and demolition of locking down, the dust is settling and we're beginning to see what's left in the rubble.
This is the time where you will need to be asking courageous questions when looking at your business.
Does the model work? Can I change it? Do you have money? Do you want to fight for it?
Or... is it time to shift direction?
The big question left is, "what now?"
To answer this, you need to be very clear on your cash position.
Now is the time to ensure you are keeping tabs on how much money you have, and how long for.
If you haven't already, look into your Xero account daily and keep an eye on:
Cash due in
Cash in the Bank
This will tell you how long your cash will last you, and when you need to plan to take action. You will need to scenario plan. Worst case, best case and mid case... as of this week.
Most businesses are assuming (heavy emphasis on assuming) lock down will last until end of May 2020, and then reduced activity will commence. So thinking of that, what do your scenarios look like?
When do I look for finance?
This is why you need the runway - when is it that the cash starts to wain? What day?
Aim to apply for lending based on those dates. If you need it now, apply now. If you need it later - apply then, as so much could change between now and then, and the bank will want to see you trying.
CBILS ( Coronavirus Business Interruption Loans)
Business interruption loans are starting to come through, a low 1% have been accepted however having spoken to a few lenders and brokers out there, what we are hearing is that despite what the media are reporting, the main hold up for applications is a lack of requested data. Business owners haven't got their books prepared.
Once you know your cash runway, make sure all your data is ready for if and when you need finance.
Keep your books up to date daily - that means:
Reconcile all accounts daily
Keep all expenses and invoices recorded neatly
To apply for a CBIL, you will need:
Last 3 years full accounts with detailed P&L
Last 6 months business bank statement (Lloyds Bank usually need 6 months personal as well)
Up to date management accounts
Aged debtor and creditor lists
Confirmation of any outstanding debt (provider, term, repayment)
Statement of personal assets, liabilities, income and expenditure from all Directors
Paragraph on how Covid-19 has affected the business and what the funds will specifically be used for.
Our clients are all kept on Xero, with all bank statements, receipts and invoices digitally fed into the accounting system... in real time. We, the client, and any other stakeholders can access all this data at speed, when they needed it yesterday.
If you haven't already have a look at cloud accounting software, having up to date info will be essential to help you navigate these times.
Who gets the loans?
It's worth noting, these loans are for established businesses with a good track record.
They are there to help businesses that were running well, and with profits PRE COVID-19.
Sadly any businesses that were not in a good state of health prior to COVID, will not likely be helped out.
There will come a time where some business owners will need to check your business model and that painful question... "Is this really working?"
If you think the answer is No... then please don't worry.
Talk to your friends family and your trusted accountant for advice on what opportunities the future holds post COVID.
Endings are angst-ridden, and overwhelming at this time... but often the best things happen when we leave situations that no longer work.
My favourite quote at the moment is...
It'll be alright in the end, and if it's not alright, it's not the end.
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