In general, many small entrepreneurs find it difficult to take the time to analyze their business due to the day-to-day run. However, the lack of closer financial management can generate external pressure on the business, specially when the business activity is directly or indirectly affected by the absence of checking routine, leading entrepreneurs to stop the normal flow of their business to review it.
Therefore, every crisis is also a good opportunity for transformation.
In an atypical situation, such as the impact of Covid-19, it is necessary to prepare for the worst, but do the best to prevent this from happening. To avoid impacts that could compromise your business, the first step is to do a financial check, surveying the current business situation and prepare a recovery plan.
To do this, identify all revenue options and expenses, preferably separating the costs as fixed and variables (those that fluctuate according to the volume of production, for example). In sequence, organize cash flow to survive in the short term without affecting the long term.
To ensure that what has been programmed at this atypical stage is done, create a routine to do a weekly check on finances and correct deviations. This will avoid surprises at the end of the month.
Also take advantage of this period to ask yourself: is the solution to control the finances only and return to operate exactly as it was doing before? If that original activity was affected by this crisis, what can be done to improve it and reduce the risk of suffering from an upcoming crisis?
Finally, we believe that the second step after an initial financial analysis/review is a more holistic analysis of the business, seeking improvements and innovations to take-off again!