Don’t Just Hope For the Best – What Does the Data Tell You?
For months, the headlines have screamed that millions of small businesses will file bankruptcy due to impacts of the COVID 19 pandemic. Perhaps you have had the thought in the back of your mind, calculating how many weeks you can remain in business before considering closing your business and possibly even filing for bankruptcy.
Don’t just wonder – take steps to gain a confident understanding of your business’s financial position.
Communicating with your banker and investors effectively is essential during these times of economic upheaval and doubt. To do so, you must have the right financial data to inform yourself, and then to inform your financial support team if you will struggle to make payroll in a month or two. What you need is a 12 week cash flow projection.
Instead, you are hunkered down, uncertain of your cash position, keeping silent and hoping for the best.
This is not a great strategy. The most important thing you have as a professional is the trust you gain over time as other professionals recognize you do the right thing. I recently had a Senior Executive of Marketing where I was serving as an Interim CFO say that they appreciated my intention to always do the right thing and recognized how much it helped the team feel more comfortable. Prior to that comment, I would have never dreamed someone in marketing would notice.
Bankruptcy is not the only option if financial projections indicate your business is in serious trouble; in fact, your business has to qualify to file Chapter 11. The Small Business Reorganization Act of 2019 has created other options for small businesses (set to expire in March 2021) to seek protection from debtors. The key to moving to the next step is for you to communicate pro-actively with all parties and let them help you understand your position as well as the options available to you rather than using hope as a strategy.
Empower yourself with knowledge and get the cash flow projection you need! Listen to a podcast where I was recently interviewed about cash flow here.
If you need help starting the conversation with your financial partners and stakeholders, I invite you to set up a 30-minute free consultation with me right now by clicking on this link to my calendar – let’s talk!