How to Boost Your Business Runway beyond Covid-19| North Loop Official Blog
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29 Dec 2020

How to Boost Your Business Runway beyond Covid-19

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Introduction -

The Covid-19 has impacted every business globally - albeit in different ways. While some of them noticed sinking revenues and reached rock bottom, few others experienced a surge in consumer spending and enjoyed increased profits.

Even though some are still measuring the pandemic's impact on their revenue, the pace at which they will bounce back will depend on several factors such as the basic needs that they serve and the shift in consumer patterns.

In this article, we shall discuss ways by which you can come up with a lifeboat strategy for your business and prepare to survive in these times.

An alteration to your Business Continuity Plan -

Some businesses like digital payments, essential commodities, grocery shops etc. saw a surge in demand while other industries like travel, hospitality, event management, aviation came to a grinding halt. Some of them like essential commodities retail and online learning saw a complete shift in consumption pattern with large-scale online-service demand.However, despite the differences and trends, every businesses' goal remained the same - to survive.

How to achieve that?

Experts suggest that every business needs to alter its Business Continuity Plan and embrace the new normal.

While completely reinventing or altering the current business model may not be necessary for many businesses, a temporary change in the core business or a permanent pivot can be beneficial. For example, if you own a retail store, this is the time to take your business online and set up a delivery facility so that you can provide services to all those buying essential products online.

Some other ways you can bring about a change in your current plan is to collaborate with other enterprises and leverage their talent or expertise. That can allow you to uplift your venture as well as help other struggling businesses.

What is the importance of the ‘runway’?

The ‘runway’ is the amount of time a business has before it runs out of cash. That means if your monthly expenditure is, say Rs.10000 and you have Rs.100000 in the bank, you have ten months to start generating positive cash flow.

Ideally, most businesses must have already calculated the amount of time they can stay afloat with existing cash reserves, especially when the lockdown got announced. However, the ongoing economic crisis makes it vital to plan further ahead for a minimum of 12 months.

That can include evaluating your available cash resources after considering your most conservative cash inflow and the income you can generate in the next 12 months.
Profile image2: What is the importance of the ‘runway’?
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Some other crucial business decisions -

Let us take a look at some of the other decisions that you should take in these times to boost your freelancer runway -

Prioritize collections -

Ensure that your cash keeps coming in. You can do that either by offering more discounts or adopting any other trick that keeps the steady cash inflow in place. Profits should not be on your priority list right now.

Build new revenue streams -

The pandemic must have made you realize the necessity of multiple revenue streams. You can still use the time to take a step back and reassess your core assets and revenue streams. For example, if your business already owns a delivery fleet, you can collaborate with others struggling to do so. That can also allow you to use their expertise and ideas in areas you are facing difficulty.

Cutting down on unnecessary expenditure -

Instead of letting go of your cash on discretionary expenditure, you should focus on careful inventory planning right now. Spending on any non-moving stocks during such periods would also not be a good idea.

Look for additional capital sources -

To survive the crisis, you should be on top of any financial aids announced by the government to uplift businesses and startups. That means you should focus on both - new credit lines from banks or other financial institutions and equity infusion, which can be a great option if you tap into the right channels.

Use the support of your team -

While you may come across many people who advocate firing employees as one of the best cost-cutting measures, it might not be the best idea. That is because you may need your team's support to bounce back in an environment when consumer perspective and priorities are undergoing a massive change.

Instead of laying them off, you can discuss things like minimum pay, ESOPs etc. and promise them bonuses or rewards post Covid-19 times. Most experts also suggest that instead of letting go of your employees, you should find projects where you can put their skill-sets to use with sufficient earnings.

Conclusion -

Times like these call for businesses of all sizes to come together. You should join hands to fulfil the basic needs of your customers and fight the war against Covid-19. As a startup, SME or local organization, the only smart way to boost your business right now is to think collectively and stand together as a community. Focussing on your cash reserves and income streams are some of the other crucial aspects.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.