How to Prepare Your Business for the Second Lockdown

 

As Ontario faces another lockdown on Boxing Day, businesses have a short period of time to prepare for the financial health of their operations and for the wellbeing of employees. While the lockdown is certainly going to be financially taxing on many SME's, the silver lining is that this is not the first time businesses have been through the challenges of either closing completely or operating with restrictions in place. 

If you haven't already, now is the time to lean on your experience over the last year to ensure that you are as prepared as possible for the second lockdown. Here are five tips to help you do just that:

1. Look back at your response to the first lockdown

A successful business is introspective. It's important to look at what went well, and what didn't during the first lockdown and make changes accordingly this time around. Keep in mind that what went well from your perspective may differ from others. Take the time to talk to your employees, partners, suppliers, vendors, and customers to talk about what worked and what you should do differently.

2. Expect and anticipate shipping delays

There have been more shipping delays than usual this time of year because of increased online holiday orders as consumers bunker down and stay home. That may mean that essential business goods or shipments out to customers are taking longer to arrive.

Be patient and remember that essential workers in the shipping and trucking industries are working harder and putting in extra shifts and long days. Despite their efforts many companies are still struggling to keep up with demand and make deliveries on time.

From delivering essential food items to the COVID-19 vaccine, those in the trucking and freight industries are giving up time with their own families and putting themselves at risk. This essential and thankless job is keeping Canadians fed, comfortable and secure and allowing business in Canada to continue. The best way to deal with these delays is to know the reality of the situation and place orders well in advance of when you need them.

3. Identify bottlenecks

Procuring and delivering goods may be one bottleneck to deal with during lockdown, but are there others? Common bottlenecks that can put your business at risk include staffing and cash flow.

Are you ready to cover shifts of employees who may be unable to come to work because they've got symptoms or are waiting for a COVID test result? Have a plan in place and trained staff on standby just in case.

4. Get Your Finances in Order

Many businesses across the country have been relying on government subsidies and programs to continue to operate. That may help you get through the lockdown, but it's not a long-term strategy. For businesses with reduced hours (or those who will be closed), take advantage of the time afforded you and get your finances in order. In an article for the Chartered Professional Accountants of Canada, business consultant Eitan Dehtiar suggests that businesses "look at an overall cost reduction plan, trying to transition as many fixed costs as you can to variable costs so that you have the ability to turn off the tap and adjust."

In addition to reducing costs, advice from EY (formally Ernst & Young) includes evaluating short-term liquidity and closely monitoring cash flow to stay on top of potential shortfalls.

5. Remember, Cash is Always King

Cash flow is always critical to the health of a business, but even when business is good, if customers don't pay what's owed, things can go sideways. Even businesses that have never missed a payment with their bank, like Carl Gatt, owner of BLB Transport Group, may be denied credit when it's needed.

Earlier this month, FreightWaves interviewed Gatt, who shut his trucking business down after a financing dispute with his lender, RBC Bank. Gatt, who is planning on retiring, ended up paying his drivers from his own personal savings after his business accounts were shut down as the dispute went to court.

Luckily for Gatt's drivers, RBC Bank and the courts agreed that he could sell his business to Ready Go, who agreed to buy the company's assets and hire most of Gatt's employees. "When I met Carl, I saw how much he cared about his employees," Ready Go owner and General Manager Ajay Virk told FreightWaves, adding that "we didn't want to see these guys losing their jobs."

While Gatt's story ended on a somewhat happy note, this isn't always the case. Now, more than ever, it's important to get a hold of your cash flow, ensure your accounts receivable are up-to-date, and have a plan should any government programs or subsidies you're using disappear.

Relying on your bank for credit is risky. Instead, consider invoice factoring as a safer way to ensure your expenses are covered. With invoice factoring you'll get paid instantly for your invoices so you can pay your employees and cover expenses. Give the team at J D Factors a call to learn more. Our contactless process means we're able to help your company get control of your cash flow, even during the lockdown.

 

 

 

Tips for Spring Cleaning Your Business' Finances

In light of COVID-19, your business may be feeling the financial stress experienced by most Canadians. Are your business' finances robust enough to hold you over until the quarantine is over? Whatever state your finances are in, now is a good time to do some financial spring cleaning. Revisit your business goals, plans and expenses to make your business more robust for this and future challenges. 

Revisit Your Long-Term Goals

Now that your short-term business has changed so dramatically, you may need to change your long-term goals. If you don't have any written down, now is a great time to start keeping a written record of the things you want to accomplish, whether it's a sales goal, creating a new website, or launching a new product.

Unfortunately, because of COVID-19, many of the long-term goals you've had for the year may need to be pushed back. And, because of the current uncertainty about when things will return to normal, you may have to leave your long-term goals on the backburner.

However, you can still learn a lot about what your next steps should be by re-prioritizing your goals and identifying those that you can accomplish in the short-term. Maybe a new product launch isn't your next best step. Perhaps reaching an online audience or starting to ship your goods is now your top priority.

Better Business Management

Have you invested in new digital tools to help you manage your business? These solutions aren't just limited to finances. Cloud-based tools may be as helpful for communicating with clients as they are for invoicing or communicating with your employees.

These solutions do not have to be expensive, either. There are now many free or open-source versions of some popular business management tools. Although, depending on your current finances, now might be a great time to check out paid options too. You have the time to really get to know new software and discover if it will fit your needs moving forward.

Consider Cash Flow

Many businesses are having cash flow problems now as their sources of revenue pause or dry up. If you were already having cash flow problems before the crisis began, you may have had even less time to prepare your business to survive than you would have otherwise.

You can better manage your cash flow moving forward with factoring, a type of financing where you are paid up-front for the invoices you create, even though you have not yet been paid by your client. This arrangement gives you the capital to buy materials, tools, pay employees, and handle your other business expenses.

The team at J D Factors specializes in non-recourse factoring and remains open for business for new and existing clients. We know that the current situation has put a lot of financial stress on companies, which is why our team remains open for business and ready to help you.  Our advanced automated systems will allow you access to quick cash in under 24-hours. Simply send us your invoices and any backup documentation such as time sheets, delivery slips, etc. by email and we will fund you with a direct deposit into your bank account.

Our non-recourse factoring program will allow you to continue to work for and bill your customers with peace of mind knowing you will not have any bad debt. This is a great way to minimize your risk in times of uncertainty. Give us a call today to learn more about how we can help your business survive the financial uncertainty caused by COVID-19.