I’m Brody Sweeney, the founder of Camile Thai Kitchen, an award winning home delivery franchise. This blog is not about my business, but rather some advice for if you’re thinking about franchising, or indeed already involved in it – and want to learn more.
Making sure your cash doesn’t run out is arguably one of the most important things you have to do with your new business. Inevitably things cost more than you think, and business takes longer to pick up. If you run out of cash while this is happening, the game is up. I’ve set out below my best thinking about how to make sure you don’t run out of money, before your business gets established.
Stop the bleeding.
Even though we are well into the crisis, and you would imagine that all costs have been cut as much as they can, reality is only now setting in for many business owners – particularly that the recovery may be in the distant future. If you haven’t stopped the bleeding, you won’t make it. Income supports and grants have given many a false sense of security, but you are paid to be a leader, and putting off tough and hard decisions is not being a leader. Act now, you owe it those whose jobs can be saved.
Make a plan and adjust as you go – early and often.
Having a road map out of the coronavirus crisis is a vital step to getting your business to a steady and profitable state. And even though you know intellectually that your plan wont work out exactly as you think – there are so many things you can’t control – its still better to have a plan, that you continually adjust to achieve your objective.
The plan you may have prepared at the start of this is by now probably completely out of date, and you need a new one, reflecting the new realities as soon as you can.
Preparing a new plan starts with an honest analysis of where you are today, not three months ago. Look at the 4 main areas of your business – finance, marketing and sales, operations, and HR and be hard. Tell it as it is. From this honest analysis should come a detailed vision of where you now think the company could get to with a reasonably fair wind – under the same four headings. And finally, a detailed plan of what the business needs to do over the coming 12 months to make concrete progress towards your new vision.
Knowing things wont work out as planned, means you need to be prepared to adjust as you go, and keep adjusting – daily, weekly or monthly – until you are on track to achieve your objectives.
Constantly update your running cash flow.
Running out of cash is how most businesses grind to a halt, and in the fast moving and highly unpredictable environment around the virus, you need to keep on top of where you are with your cash. Making predictions as new information comes to hand, and you see your actual trading performance, allows you to update your projections, and anticipate cash problems before they happen, so you can take action.
Find out and use available supports.
Refresh yourself as to what supports are available to you to help your business during the crisis. The obvious one like the pandemic payments and Tax warehousing you will probably have availed of already, but there are a plethora of new state supports including restart grants and online retails scheme – as well as cheap ways to borrow money, with a partial state guarantee, that may have been introduced since you last looked.
Don’t pay yourself too much.
No one likes taking a pay cut, and what’s obvious to you, you’re intricate knowledge of the business, may not be as obvious to an ill-informed employee. Lead by example, by taking the largest pay cut for yourself, if that’s necessary.
Get a good money person around you.
Having the comfort of someone really good with money, at your side, during a crisis make life a lot easier. The wise counsel, and unemotional help with decision making is very valuable. If you are not blessed with one already (which could be from an external accountants), then do yourself a favour, and make it a priority to get one.
Communicate with everyone affected by your financial decisions.
The pandemic is a time to over communicate with anyone who may be affected by your financial decisions. At the outset of the Lockdown, we cancelled all our direct debits. We communicated this and the reason why with our suppliers. As soon as it became apparent that our business was not being badly affected, we re-instated them – and communicated this and the reason why to our suppliers. We communicated with staff about wage cuts, with the bank to re-assure them we were OK, and with landlords as we needed. Especially with the staff, who were worries about losing their job, or getting sick – it removed a lot of the stress and worry they may unnecessarily have had.
Run weekly profit & loss accounts
Keeping a close eye on the financial performance of the business, not just your cash flow – keeps you close to when you have to make decisions that reflect the business that you are actually doing, as opposed to what you projected.
In our business, we run weekly Profit and Loss Accounts for each restaurant, and these become a tool with which we can measure the effectiveness of our decisions, and the wisdom of our managers. If we weren’t measuring that frequently, bad stuff could be building up, that we are too late acting upon.
Measure your KPI’s and act on them
Undrstanding the effect that lower sales are having on your KPI’s is no brainer information for your business. It is a fact that model margins for labour as an example, are much harder to achieve with lower sales. Most businesses have 3 or 4 key numbers that explain the businesses health. If you aren’t running those numbers at least on a weekly basis, your not running your business properly.
Double down on pockets of current or future growth
While your traditional business model may be in trouble during the pandemic, resourceful companies are exploring new ideas and ways of doing things. This is a time for speed over perfection. As you find pockets of business that are doing well – for example takeaway meal kits have worked really well for some restaurant businesses that were not able to do dine in business. Smart owners have doubled down on this new and unexpected source of revenue.
If I have any good advice to give around running the finances of your business, it’s this: get a Shabu. From the beginning, my co-owner and accountant Shabu Mani took charge of the money – making sure we kept our books up to date, and that we knew exactly where we were at a given time. He also sense checked me when I wanted to try something, and became quite mean, when money was tight – exactly what you need with an accountant.
These are taxing times for many businesses, and keeping control of your finances seems obvious. But with so many other aspects of the business occupying your thinking and time – losing track of the money, or indeed running out – can bring the whole pack of cards down.
Good luck and stay safe.