The Global response to COVID19 has slowed down economies causing many businesses to revise their cash flow projections. For SMEs whose cash flow cushion is pretty thin, determining what will keep them afloat and dropping expenses that no longer add value seems to be the most viable solution. The current situation has come with stringencies that are not making the business atmosphere any more favorable.
- Limited Access to Capital. Most investors are holding onto their purse because of the high level of uncertainty surrounding trade and finance.
- Low demand for Products and Services. This means a low turnover in the second quarter depending on your sector or industry.
- Financial loss. Many businesses are experiencing financial loss on their current and fixed assets. Inventory is becoming obsolete, investments are falling in value, and advance payments that can’t be claimed will turn into expenses that didn’t add value to the business.
However, there are steps business owners can take to improve their cash position and pivot their SMEs for the after COVID19 period.
- Renegotiation of supplier payments and other creditors in order to increase the credit period and soar up your cash position.
- Reduce operations and operate lean to avoid unnecessary expenses over the next 3-6 months.
- Renegotiate debt and interest payments with financial institutions. Bank of Uganda issued a memorandum recently enabling commercial banks to restructure loans to their customers.
- Revise the employee value proposition and involve them in the decision of what can be done to reduce company expenses and improve resilience.
- Hedge future operational challenges, by initiating plans on how to diversify the investment of surplus business incomes in the long term and short securities or instruments.
- Develop an ICT enabled delivery system to improve the operational resilience of the business. Leverage existing delivery services and digital platforms
- Move staff engagements online and encourage them to stay home during this time. Safety first.
- Explore collaborations and partnerships across your value chain. You don’t need to reinvent the wheel.
- Rethink your value propositions to your customers. Some things will never be the same again. Determine how this global pandemic has reshaped your business landscape and strategise accordingly.
Thank you for reading!
Managing Director Finding XY