Businesses doing the simple things well is as important in crisis time as any other time, claims Transport Financial Consultant Donal Dempsey; “Every bus and truck operator must not forget this, if they do, they could pay a big cost, their livelihood.”
In the past week Irish transport firms are starting to see the ‘new normal’ a little clearer. They are an essential service to industry and on average volumes have dropped between 20% and 30%. Some sectors have been decimated (example: car transporters), while others have seen a spike in volume (niche sectors dealing with health care). But these are two extremes and the majority fall into a sector that with Government’s wage incentives and bank support such as lease moiety without interest and commercial mortgages extended, in the short to medium term struggling businesses can survive.
Top 5 Crucial items to watch
- Customer Retention (don’t assume they are okay keep the all-important contact)
- Cost Control (use current incentives to retain profitability)
- Cash Management (cash is king, as previously outlined)
- Connections (keeping you as the business owner okay)
- Creativity (this is the financial plan to keep the business sustainable long term)
In this time of crisis financial planning has never been so important, as factors are changing both positively and negatively each week, but like the Government having a 5 Step Plan to getting this country back on its feet economically (while at the same time minding the health of the nation) the business should have updated financial data that steers the firm through this.
The heads of our pillar banks are already saying that they will be more prudent in lending because of this crisis, and are looking to Government to underwrite 90% of the risk of loans to small and medium sized businesses for liquidity. But as we all know strong financial control of the business is the only guarantee to have access to funds and know that hard got balance sheet value is not eaten into.
Margins are always tight in transport, many firms stumbled over the issues regarding Brexit and had reasonably strong Quarter 1 business and profit wise. Companies that have strong financial planning in place are recording margins of 5% to 10% above average.
When this crisis abates slightly and Government incentives cease, that is the time that the strong businesses will forge ahead. They will have adapted best to the new norms of operation and will be eager to mop up new opportunities. Having a COVID-19 financial plan in place that reviews profitability and cash management is crucial, and presenting this plan to financial houses are all huge assets in running the business in these times.
In these troubled waters, company owners and management need to be concentrating on the five Cs above and, together with the accountant/financial advisor, provide accurate, timely and relevant information to steer business. Remember when the fog is down and conditions are changing rapidly (as they are now), it’s the ability of the helmsman and the accuracy and trust in the navigator (accountant) that will win out as opposed to outright speed.
As the world heads into recession, businesses need to be prepared for a lengthy downturn as most businesses will fail, not at the height of the recession but in the long months post that date. Only the well organised, efficient, highly productive businesses that are creative enough to change, will succeed. The main advice this week is keep preparing for what is ahead, use all help available (prepare for the worst and work hard to make it better). It’s the businesses that make the right decisions now and keep on top of planning that will not only survive but will prosper.