This blog was originally written in response to COVID-19, a worldwide pandemic that hit in early 2020 where millions of businesses of all sizes were affected by mandated shutdowns, social distancing, and indefinite home quarantines.
When the world seems to be flipped upside down, it can be challenging to understand how your business will be affected by all of the change. Although the effects vary by industry, there is no denying that sales will more than always be impacted, leading to changes in operations (and ultimately profit).
So how do you survive the storm when clients are unable to pay, sales are unpredictable, and you’re close to shutting your doors? Here are our best tips on how to stay profitable during a pandemic.
Offer Support to Your Clients
Client retention is key to surviving a pandemic – after all, they are the reason you are still in business! As soon as you are aware of the facts, begin reaching out to each of your clients to offer support and answer any questions. Through your communication, ensure you are providing actionable and realistic solutions while giving them the confidence and peace of mind that they will be taken care of. You may need to make some necessary adjustments to accommodate their needs, but be willing to be flexible and understanding of their situation.
Using Profit to Eliminate Debt
The core of Profit First relies on regular, bi-weekly allocations of your net revenue account to four foundational bank accounts: Profit, Taxes, Owner’s Pay, and Operating Expenses. Each account is assigned an appropriate allocation percentage to ensure you are getting paid while eliminating unnecessary expense to ultimately generate debt-crushing profit.
During your bi-weekly allocations, you must fulfill the needs of your Profit, Tax, and Owner’s Pay accounts prior to OpEx. If (and most of the time when!) your expenses exceed your allocation budget, you must work to aggressively eliminate and reduce expenses in order to operate within your means. For most of us, that’s a hard pill to swallow!
Our goal is to put you first without losing the business you’ve worked so hard to grow. Working with a Certified Profit First Professional will help you cut the right expenses in your business so you can focus on operating as lean as possible!
Once you have run a full quarterly cycle of this system, you will use 90-99% of your profits to pay off any debts you have accrued, with the remaining taken as a reward just for YOU! That’s right – we believe in the idea of celebrating our business wins in order to encourage future success with the system, so take the remaining 1-10% and spend it on you (but do NOT reinvest this in your business!).
Review Your Financial Plan
Do you have an emergency fund to pull from? Are you still able to pay yourself a salary? Setting your business up for future hardship is important, but is critical during an unforeseen pandemic. Now is the best time to review your financial plan with your profit advisor to ensure systems are put in place to protect you and your business during these times. Figure out where you can cut costs and how to adjust your plan moving forward. Our profit planning system puts safeguards in place to keep things flowing when business is not as usual!
Get Creative with Your Offers
You may not be able to offer the same services as you normally do during a crisis, but that doesn’t mean business has to come to a complete standstill. Think outside of the box – how can you continue to serve your clients when they may not have the budget or capacity to work with you as usual? If you typically provide your services in-person, discover how you can offer a virtual experience. If your offers are more on the high-end, think about how you can create a low-end offer that provides an alternative solution. Remember – your clients still need you during this time!
Be honest with yourself about the situation at hand, but don’t let fear overcome you! Continue to enforce stress-relieving methods and keep a level-head about how to best move forward with your business. Remind yourself that this is only temporary, and you WILL get through this! And if you don’t have an advisor already, now is the perfect time to seek professional advice on your next steps.
Are you prepared for hardship? Our team is ready to set you up for success now before it’s too late! Schedule a free consultation with one of our Gurus today.