Any planned change will be targeted at a specific issue – say, reduce sales prices to win more customers and increase footfall – but actions of this kind have knock-on effects. For example, what effect will the proposed reduction in sales prices have on profits, cash-flow and solvency?
Many of these scenarios can be mapped on spreadsheets or large backs of envelopes, but this requires an investment in time that very few of us can afford.
To undertake these calculations, it is necessary to nest formulas – the math – to cope with the variables involved. This involves asking a string of what-if questions to fathom out the required result.
Without a doubt, the question what-if is a key that opens doors to resolve complex problems.
COVID-19 has created unprecedented economic disruption. This means that all business owners need to consider their options; what do they need to flex in order to survive in the coming months?
If you are short of ideas for this planning process we have listed below some of the financial indicators that may need to be considered.
Concerns about:
- Sales, pricing, volume, footfall.
- Direct costs, raw materials and direct labour.
- Other fixed costs
- Profitability
- Sustaining losses
- Cash-flow
- Solvency
- Financing
Each of these items may have effects on others in the list.
And we can help. Let us cope with the math for you. We can ask the what-if questions and reorganise your answers into an integrated planning report. In the coming months it is businesses that undertake this detailed planning that will emerge intact as things gradually return to pre-COVID levels.
Please call so that we can organise this for you.
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