As the pandemic looks set to continue, longer than we may have thought at first, Donal Dempsey advises we must remain vigilant. He suggests three key tasks that prudent operators should concentrate on and get into a habit of doing them on a weekly basis.
While we are in this COVID-19 crisis which is highly likely to last far longer than initially expected with serious ongoing financial and social consequences. Here are three key tasks that a business owner should concentrate on weekly.
Like everything that is vitally important these assignments can easily be made to form a habit and have long term benefits for the business.
Item 1:Â Cash Flow Management
Cash Flow Management means assessment of what funds that are expected to flow into and out of the business on a weekly basis. This needs to be undertaken in order to have a longer term cash flow projection that you continuously update (as positive and negative factors change). If cash flow is becoming an issue, do you need to step in to review customer payments? There is nobody better than yourself to collect your debts. It can be an issue with suppliers looking for unrealistic payment terms, they may need you to speak with them to provide assurance of the business strength. Does the firm need support from your bank short term? If operating invoice discounting, as the majority of transport companies do, is there a backlog with invoice preparation? Are there other issues you need to know that is restricting funds available? In this crisis make sure you are on top of this issue yourself, no point waiting until wages or key suppliers need to be paid to start firefighting. At present, banks, finance houses and Government are all assisting in keeping business liquid and this support will be there short to medium term but you need to be actively working with all elements of this scenario to safeguard your business and peace of mind.
Item 2:Â Profitability
There is no point running yourself and the business into the ground being too busy on other things to concentrate on the proper management of the business. Review weekly profitability (confirmed by monthly or quarterly management accounts). Many transport firms are owned/ managed by individuals that are experts in the technical and operational side of the business but more and more transport firms now owned and run by individuals whose main strength is administrative and financial. Concentrating energy on maximising the bottom line has never been so important, so availing of all Government incentives, using interest free finance breaks and optimising low fuel costs are all armaments in the arsenal to fight reduced turnover and business changes. Those that concentrate on liquidity and profitability in this crisis will be the movers and shakers when this is over. Get easily used systems in place that weekly monitor cash and profit. Fine tune these systems to ensure a winning formula going forward.
Item 3: Â Change
We all dislike change, some of us more than others, we all have our favourite chair at home, same way of working, same contacts and customers, same bank manager (if we can). Well, all that has changed and every day we are now faced with new challenges. Every week in this crisis you should change one positive thing in the business. Change does not have to cost huge money, but it should allow it to work better and more profitably.
Example I: Get your administrator to set up weekly cash/profitability reports.
Example II: Do a stock check on garage workshop parts and start proper controls.
Example III: Look at driver incentives/bonuses and see if they are working and being implemented properly.
Example IV: Look at streamlining PODs and how electronically this process can be implemented.
Example V:Â Improve the system of customer contacts both for service and rate reviews.
Example VI: Better monitoring of diesel usage.
We all have to change and adapt to survive, let’s look to each week to create and implement a positive change and how that will long term benefit both profitability and cash flow.