Planning for Recovery: Manage Your Future
The earlier you plan for an eventual recovery, the better for your small business.
Right now, there's good chance you've just gotten off the phone with a creditor, or you're about to get on the phone with one. As important as reaching out to those you owe money to—and those who owe you—is planning for future. And not just for the difficult next few months, but for the recovery to follow. That may seem premature, since nobody knows when the pandemic will end or how much damage it will inflict before then, but the earlier you plan, the more prepared you will be. (And you can be sure that at least some of your competitors thinking about this.) You need to anticipate what your costs will be, how much in sales you’ll need to cover the costs, and many other factors.
1. Create a cash-flow forecast.
Estimate all streams of income and expenses for each month through at least the next year. "Initially, these cash-flow forecasts are what we call a WAG, which is a ‘wild-ass guess,’” says Steve Burke, a counselor with the Washington Small Business Development Center in South Seattle. “What we're tying to do is get to a SWAG, which is a ‘scientific wild-ass guess.’”
A cash-flow forecast “becomes your business plan in the most flexible way,” says Burke. “This is the kind of thing you can look at daily. And you can say: ‘Wait a minute, based on what I hear today, my estimate on that—whether it's a cost, or income, or whatever—is probably not accurate. You can make changes to it as you learn more.”
You can also use the forecast it to consider alternate scenarios—a rapid economic recovery, say, or a slower one.
2. Get acquainted—or reacquainted—with your business.