There’s little to be done to stop the virus hitting us all in some way and the uncertainty of the impact is very worrying. I can’t wave a magic wand and pretend things will be all right. However what I can do is to share some, hopefully useful, finance related hints and tips to help us all weather this unprecedented situation and traverse through it as best we all can.
My first tip is for freelancers and the self employed to take a moment. Step back from your normal work. Just for a little while, turn off the updates about what is happening with the virus. Look inwards at what this all means for you. Not just for your business but your personal finances too.
New ways of working
Scrutinise your work and how you deliver it. Does it need to be done face-to-face? Can the work be delivered remotely? What do you need to put in place, both at your end and with effective communication with your clients and customers to continue to be able to deliver the work? What positive measures can you take to make sure the work goes ahead and you get paid for it? Draw up a communication plan for your business. Update your web site with positive “can do” messages as to how you’re handling things for your business.
Getting paid for the work
As part of looking at your workload it’s worth taking a moment to review how you will get paid given that cashflow is likely to be tight both for you and your clients and customers. You certainly don’t want to find that you’ve delivered work but there’s no funds available for you to get paid.
Don’t be afraid to ask for deposits and staged or instalment payments for your work. This may be something that you introduce into business as usual after this crisis.
You may even want to consider a small discount for more favourable payment terms balancing the need for money in the bank against a higher selling price for goods or services.
Think like a Finance Director to maximise your cash flow and, of course, if anyone owes you any money right now chase it up and secure immediate payment without further delay. You really need that money. So get on the phone to any debtors today and politely ask for immediate and prompt payments of outstanding invoices particularly those which are overdue. These funds will be needed to get you through the next few months.
Review of business costs
Next is the really hard bit, a total review of all business outlays. Start with the really simple and obvious things that can be immediately switched off and then work through the rest of the list of costs. If you don’t have a list of your overheads grab copies of your bank statements for the last 12 months and examine every single entry. If you had your time again what could you cut back on?
Now really is the time to:
- Review amounts spent on Apps and stop paying for ones that you don’t use
- Switch your bank account to reduce or eliminate bank charges and fees
- Change your Accounting system to something cheaper or even a free offering
- Check your mobile phone package and review your tariff against current offerings available
- Find ways to cut down on or eliminate business travel
- Check insurances to see if you still need them or if policy premiums can be reduced on renewal
- Look at your domain, hosting and internet costs. Can any outlays be reduced?
- Will the current spend on advertising, Google AdWords and the like bring desired results at the moment? Should advertising programmes be temporarily stopped and the money saved?
- Assess how much you’re paying your accountant. Can you do more yourself to reduce the fees? Can you secure a cheap accounting offering by shopping around and moving accountant?
Top tip – combine your bank account and Cloud Accounting by switching to NatWest and getting FreeAgent free (Click here)
And what about your personal expenditure?
Of course the same approach applies to your private expenditure. Undertake the same review on your last 12 months of expenditure seriously considering cutting down on subscriptions, coffees, lunches and the general day-to-day incidentals as well as the bigger ticket items such as better quotes for insurance, switching credit cards to interest free ones, changing your phone tariff and reducing personal expenditure wherever possible. Reduce your food bill wherever possible although with unnecessary panic buying this may be a challenge at the moment.
Make a list of the monthly costs that you have to cover such as rent or mortgage, food, electricity, gas, council tax and so on. This will help you to keep focused on how much you do need each month to survive.
Other ways of raising or earning money
It may be that because of the nature of your business there’s just no way for you to continue to provide your products and services through this crisis and you’ll need to look at other ways of earning or generating money. Perhaps you’ll need to re-invent your offering being creative in the ways that you can offer product or service during this unique period of time. Is it time to sell some unwanted personal possessions like that old bike at the back of the garage, that cabinet stored in the shed, those clothes that you bought in the sale that still don’t fit? Being inventive is critical using your time wisely to invest in positive pursuits that could generate funds rather be drawn into the general doom and gloom natter on social media.
It may be very hard to remain positive during this unusual time and the next few months are not going to be without challenge for all of us. Coping with the troubling financial situation as well as self isolation may leave many feeling wretched.
Never before has there been an overwhelming need to channel a positive attitude.
Planning for the worse and hoping for the best is one positive step that you can take. Things won’t be fixed but taking a look at your business and personal finances sooner rather than later will put you in a better position to handle whatever this spiralling situation may bring.
With this in mind my final tips are:
- Preservation of life must be the primary objective
- Health and wellbeing come a close second to that with focus on keeping active, exercise and improving general fitness to keep strength to a maximum to fight whatever this virus may throw at us
- Plan for the future both during the crisis and afterwards
- Take this time to reassess your lifestyle eliminating unnecessary costs and outlays and trying to build a small surplus to tide you over through future difficult times
- Be sensible
- Don’t panic