Resilience Agenda’s Small Business COVID-19 Cash Flow and Cost Reduction Play-Book
7 minute read – Hadleigh Fischer
Like most small businesses, Resilience Agenda is not immune to the slow-down in economic activity and its effects on cash-flows, costs, and product and marketing planning for the year ahead. Thankfully, we’ve got cash in the bank after a successful 2019/20 season, and we’ll get through this.
Over the past 10 days, I’ve been going through my forecasts for the year, topping up investments here, and trimming back expenses there. Here are some of the best ideas I’ve discovered for making a difference, saving me several hundred dollars in costs, and deferring a payment of over $7,000.
If you are a very small business you could do these yourself. Otherwise, share the list with your operations manager or Finance Manager and ask them which ones they’re acting on. Share with your colleagues, and let us know if you’ve discovered any others and we’ll update this list over time.
Here’s a list of 15 practical money savings steps you can take today:
1. Ring up your website domain provider and ask for a discount, or a less expensive hosting plan, especially if you’re in e-commerce and you’re expecting a lower volume of visits or sales. I tried this yesterday and saved $49 on my hosting plan per month.
2. Most businesses have a CRM or mailing list where they send bulk or automated emails. Not all customers are of equal value, and some have simply stopped engaging with our brand. It’s costing us money, and hurts our performance stats as well as our domain reputation. Beyond a certain level, most companies pay for extra fans, so it makes sense to trim this where possible.
” Ring up your suppliers and ask for a discount. You’ve got nothing to lose.”
First step, is to do a list sort or clean-up. Alternatively, archive your disengaged or non-responsive contacts on email list platforms like Mailchimp. Did you know that you can filter, sort, archive and keep thousands of emails on your CRM, but reduce the monthly cost of your subscription without deleting their data or details, simply by archiving them. Visit your CRM website and find out how. If you use Mailchimp, here’s a link here.
Instead of deleting them for good, archiving just means you can’t email these prospects in the month where you have paid for a lower number of contacts. But they are still there, and if you want to reach them again, you simply de-archive them and pay a higher rate. For us, with over 10,000 supporters, we are on one of the more expensive plans, but by archiving we’ve been able to save $39 per month.
With a bit of attention and pruning, you can save your less engaged clients for a more targeted campaign later in the year.3. Ask for discounts at the bank on your savings account. I asked the relationship manager at my bank for a discount, and am please so far to have saved $12 per month.
3. Ask for discounts, and schedule calls with providers. Paypal is one of my payments providers on my Resilience Agenda e-commerce website. We’ve got a phone call coming up next week where we are going to discuss reducing my transaction rate given the volume we give them.
Having said that, I tried this with another payments provider, and they said no. But you can’t win them all.
4. Think about any other ongoing monthly subscriptions you might have and either cancel them, or if they are critical to the business, ask for a reduced rate, otherwise you might have to cancel. Most companies will want to hang onto your business.
This could be cancelling magazines in the waiting room of your office while you aren’t there, or cancelling the fruit bowl deliveries.
I use HopperHQ to preschedule Resilience Agenda’s Instagram page, and they were good enough to change the reporting currency and give me a $16 per month discount – simply because I asked.
“Don’t forget to cancel expenses and subscriptions you simply aren’t using.”
5. You’ve probably thought of this one, but reduce hours of your staff rather than letting them go entirely. This one is pretty basic, but ask your casuals or contracts for their ideas on how they might be able to shave off a few hours of work during a lean time like this, while still focusing on the areas where they add the most value. The sense of empowerment and being a part of it will make handling any difficult decisions just a little bit easier.
6. Consider offshore or remote workers for routine, admin tasks or special projects. If there’s work that needs doing, consider sites like Freelancer.com, Fiverr.com or virtualemployee.com (one I’ve used with good results). Often you can find valuable workers who have strong language skills and who are happy to work part time or do casual projects at reduced rates compared to local workers. Be mindful of quality by reviewing ratings and previous work volume, and remember that like most things, you get what you pay for.
7. Ask suppliers for extended payment terms – it’s better than paying late, and they’ll respect you for committing to them for the long term. On the flipside, if you can manage it, proactively offer your customers extensions. With our online Mental Fitness seminars and workshops we are offering interest-free no payment terms until 21 January 2020. Click here to learn more. That means companies can share the Mental Fitness message now, and not worry about paying for it for nine whole months. Win win.
8. Revisit your accounts receivable list and politely ask your customers if they are able to pay at the moment. If you offer the option of a payment plan over time, you’ll most likely develop goodwill and loyalty, just when you need it, and they might want to pay you first.
“This is a time for living the values of your business, and if you do it right, your customers will take notice.”
9. Think about purchase orders and inventory build-up – do you or your staff have automatic monthly purchases or inventory building up that you can pause or delay until things settle down? Unfortunately, with our large B2B (Business to Business) customer base looking like they’ll be watching spending carefully for the next few months, we made the difficult decision to post-pone a new product launch scheduled May. Instead of printing a brand new mid-year Financial Year diary, instead we’ll double down on our annual 2021 diary and focus on investing in marketing partnerships between now and then.
10. All else being equal, pay off debts in order of the size of the interest rate, rather than what might ‘feel’ right. A credit card interest bill compounding at 20% will cause more damage to your financial health than a temporary injection from your mortgage offset account where you might be paying 5%.
11. If you have a line of credit with a bank or financial institution with good interest rates and terms, it might be worth considering drawing from it now before cash gets harder to access and lending conditions tighten up should the situation get worse. Simply ask your banking relationship manager what they can do for you, and what kind of rumours they are hearing about from senior management.
12. In the rush for cash-flow, think about how discounting or offering alternative services from your core produce might dilute or tarnish your premium or professional brand reputation. Short term cash or discounts are great, but think about what message you want to send your customers.
13. If you are in Australia, you can ask for deferments for your quarterly Business Activity Statements (BAS) and GST payments with the Australian Tax Office (ATO). That’s what we’ve done, and now won’t have to pay our $7,500 GST bill until September (which thankfully is when our new 2021 product launch begins).
“Find ways to add value to your customers, even if you aren’t getting paid for it.”
14. Don’t forget to focus on adding value to your customers, not just milking them for all the cash they’ve got – adding value doesn’t always have to mean making money from them now. Try to offer expertise, ideas and resources on a ‘give to get’ basis, and if you both survive, you’ll more than likely prosper as they consider you a source of expertise. If you can find a way to make your customers lives easier, reassure them and empathise, you’ll set yourself up for success in the future, and differentiate yourself from your competitors in the short term.
In sales terminology you can ‘nurture’ your relationships while they might not be buying, so that you’ve built loyalty, contact points and goodwill for when the orders do eventually flow back in.
15. The most important thing is to keep in mind that the crisis will pass – eventually, and that on the other side there will be opportunities. Think about the kind of business you want to be when you come out the other side. On the journey, while things might be frenetic, try to keep a ‘big-picture’ mindset and accept that whatever happens, even if you do go down, you’ll be learning along the way.
That’s what we’re doing at Resilience Agenda, anyway. Feel free to get in touch with your comments or reach out at firstname.lastname@example.org
Hadleigh Fischer is the Founder and Managing Director of Resilience Agenda – a fast growing Mental Health awareness social enterprise. He holds a MSc and is a qualified Mental Health First Aid (MHFA) Instructor.
Resilience Agenda aims to ‘Change the Meaning of Mental Health’ so that it’s more positive, proactive and preventative, by making it more relevant, engaging and inspiring.
“Imagine if we thought about Mental Fitness just like we did our Physical fitness?“
Building on an inspiring story of resilience and overcoming obstacles, Hadleigh’s mission is to make Mental Fitness into something each of us do each and every day, just like taking care of our physical health.
Over the past four years Resilience Agenda has become a global trend-setter in the mental health conversation by offering thoughtful and practical gifts and lifestyle products and promoting the life-changing Mental Fitness message through down-to-earth corporate workshops and seminars (which we are now running online – with no payment necessary until January 2021).
To learn more visit www.resilienceagenda.com