Episode 3:  Louisville CPA Steve King addresses the need for a mid-year business assessment, as we begin to come out of the COVID-19 lockdown and look toward the second half of 2020.  Steve is a partner in MK CPAs and Advisors.

This year, a mid-year review is critically important for your business.  If you’ve made it this far, there’s a good chance the worst if behind you.  The adjustments you made worked.  Now, let’s discuss how to maximize your upcoming performance.

You may have changes in 3 primary areas:  Internal (including staff), Vendor or Supply Chain and your Market.  There are a lot of unknowns you need to be analyzing. 

There are going to be opportunities to add staff.  You might have a stronger negotiating position with your vendors.  Some companies may not have survived, but have assets they’d like to liquidate.  You may be able to make some capital purchases at really attractive levels.

Core Areas to Review

Cash-on-hand and your accounts receivables (A/R) balance.  If your A/R balance is higher, you should reach out to your clients to see if alternate payment plans can be negotiated.  Some cash flow is always better than none.

This is a good time to begin reviewing expenses to see if additional reductions can be made.  Assess every line on your P&L statement.

Also, review your banking relationships.  Do you have access to additional financing to make important purchases or to take advantages of reduced pricing for specific items. 

If you received funds via PPP or EIDL, remember that this was a 1 time infusion.  It won’t repeat.  How are your revenues looking in the upcoming months?  Do you have the cash you’ll need to cover current expense and move forward?

Did the lockdown force you to develop new products or services (i.e. distilleries and hand sanitizer)?  Develop a plan for growing these new lines.  Consider a SWOT analysis to look for new opportunities for your business to secure incremental growth and expansion.

Emerging from Survival Mode

Now is the time to begin working on your business, instead of in your business.  As we emerge, there are still threats, but you need to reorient your thinking and your balance sheet.

Engage in local business organizations.  Make sure you and your team is reading information from various sources.  This allows you to synthesize the information and use it to your competitive advantage.

Be Visible in the Market

Make sure your sales team and managers are reaching out to key customers to see how they are doing, if their needs have changed and are there new opportunities for you to provide more or additional products/services.

Many of your competitors may have pulled back on their marketing/advertising expenditures.  Now is the time to amp up your exposure.  There’s less competitive noise, so you may be able to break through even faster.  There are always clients looking for your particular capabilities.

Other Areas to Assess

Are you meeting your objectives and key performance metrics?  How are same store performance indicators looking?  Have unexpected expenses increased pressure on your operating funds?

Challenge your traditional baseline assumptions about important areas of your business.  You may find additional opportunities.  Do your comp plans need to be updated to address the current environment? 

How is your messaging to your team?  As we emerge, the focus of your communications needs to adapt to a forward-looking objective.  Begin looking 3 months, 6 months and toward 2021.  Your internal discussions need to reinforce your updated perspective. 

Use this crisis to make your business better.  You’ve probably learned a lot over the previous several months.  Put that knowledge to good use as you begin to move forward.

For more information, contact Steve King, Partner at MK CPAs and Advisors, at 502-587-9833.  They’re here to help you to Make the Numbers Work.