Quick tips on financial preparedness
Are your grocery store aisles empty? Ours are pretty darn close and for the first time, I’m a little freaked out by the coronavirus pandemic. I’m not worried about stocking up on toilet paper and hand sanitizer (how much TP does one family really need?) but the general panic is a little disconcerting and unlike anything I’ve ever seen before.
This week I’ve spoken with leaders who are canceling major revenue-driving events like galas and conferences, reallocating budget funds to protection measures, and dealing with the impact of staff leaving or working remotely.
One recurring theme we’re seeing again and again is preparedness.
Some people are thinking about preparedness in terms of not needing to buy TP for the next twenty years, but I’m thinking about financial planning.
Instead of wondering how in the world we’re going to make payroll without the revenue from this big event, we can sleep at night with a solid forecast that shows us exactly what our financial position looks like.
We can model different scenarios to understand what levers we need to pull to reduce expenses or increase another revenue stream.
Knowing your numbers allows you to weather the storm of uncertainty.
Let me tell you, the leaders with the plans are making the smartest, most thoughtful decisions, because they have crystal clear insight into what the future of their own business or organization looks like. They’re not making knee-jerk decisions because they can see the big picture in a snapshot.
I know I make it sound easy.
But it really is, even if you’re not a numbers person. Here you go:
First, you need a plan. This plan maps out your revenue and expenses, by month, at least through the end of this year (but further if you can), and it needs to be all in one place (not half a dozen Google Sheets and random notebooks on your desk). This plan is your crystal ball into the future. You need to understand each revenue stream and each expense line which will come in handy later.
Next, you need to be on top of your numbers. Smart, thoughtful decisions can only be made with recent data. Last quarter's numbers and guesstimates won’t help, so make sure you’re on top of your bookkeeping every single month.
Finally, create a monthly routine to stay in touch with this plan. Schedule your CEO day to review your numbers during this social distancing time! Because you have everything mapped out with crystal clarity, you will know exactly what levers to pull to increase a revenue stream or decrease an expense line.
What do you think? How has COVID-19 impacted your organization so far? We’re all okay around here, but unsure of what the long-term effects will be. Luckily, I know exactly what my financial picture looks like and can make decisions accordingly.
Thinking of you all during this storm of uncertainty!
PS - If you need a resource to help you put together a plan, our Profit Playbook is a good place to start. Download it here!