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Mastering the Art of Crisis Management: A Comprehensive Guide for Small Business Finances

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StrategyDriven Managing Your Finances | Mastering the Art of Crisis Management: A Comprehensive Guide for Small Business Finances

As an accounting professional, there’s nothing more captivating and challenging than weathering a financial storm. It tests your mettle, your mastery of numbers, and your ability to make quick yet sound financial decisions. The challenge is most acute for small businesses, whose finances can be particularly vulnerable during crises. In this in-depth exploration, we will delve into tips and strategies to manage your small business finances during a crisis and emerge more resilient than ever.

1. Understanding the Vulnerabilities of Small Businesses

Small businesses often have limited resources compared to their larger counterparts, making them more susceptible to economic downturns. Understanding these vulnerabilities is the first step towards effective crisis management. Whether it’s dependence on a single client, a lack of diversification, or a constrained cash flow, understanding your business’s weaknesses can guide you towards strategies to fortify your financial position.

2. Solidifying Your Cash Flow

Cash flow is the lifeblood of any business, and this is especially true for small businesses during a crisis. Reviewing your cash flow statement regularly can reveal trends and potential issues. Focus on ways to increase income and decrease expenses, such as exploring new revenue streams or renegotiating contracts with suppliers. If necessary, consider taking out a short-term loan to tide over the crisis.

3. Building a Contingency Fund

While the going is good, set aside funds for emergencies. A contingency fund can be a lifesaver when unexpected expenses arise, or cash inflows dwindle during a crisis. It might seem like a luxury when every dollar counts, but it can make the difference between staying afloat or sinking.

4. Investing in Professional Bookkeeping Services

Proper financial management is crucial during a crisis, and professional bookkeeping service Sydney can be instrumental. From tracking your cash flow, to managing payroll and tax obligations, to ensuring your financial reports are accurate, an expert bookkeeping service can help you stay on top of your finances, allowing you to focus on navigating your business through the crisis.

5. Re-evaluating Business Model and Strategies

Sometimes, a crisis is a wake-up call to revisit your business model and strategies. Are there inefficiencies you can address? Can you pivot your business to meet changing market demands? This might involve tough decisions like restructuring or letting go of less profitable product lines, but such changes can lead to a more robust business post-crisis.

6. Planning for Recovery

While the crisis is ongoing, it’s crucial to start planning for recovery. Once the storm has passed, you want to hit the ground running. This could mean exploring new markets, investing in technology to improve efficiency, or upskilling your staff to handle a broader range of tasks.

7. Seeking Expert Advice

Lastly, don’t be afraid to seek expert advice. Whether it’s a financial advisor, a business consultant, or a mentor who has weathered similar storms, their guidance can be invaluable. They can provide a fresh perspective, help you avoid common pitfalls, and guide you towards a successful recovery.

8. Embracing the Lessons Learned

Every crisis, while challenging, offers valuable lessons. It might highlight weaknesses you were previously unaware of or present opportunities for growth and development. Embrace these lessons, and use them to create a stronger, more resilient business.

In conclusion, navigating your small business finances through a crisis can be a challenging endeavor, but with strategic planning, sound financial management, and a touch of resilience, it’s a journey that can lead to greater business robustity. Remember, the storm doesn’t last forever, and with each challenge comes the opportunity to learn, grow, and emerge stronger.

9. Utilizing Government Aid

During times of crisis, government entities often step up to support small businesses through grants, loans, and other forms of financial assistance. It’s crucial to stay informed about these opportunities. Explore the specific aid available in your area, their criteria for eligibility, and application processes. Such assistance can provide a much-needed financial lifeline, ensuring the continuity of your business.

10. Ensuring Transparent and Regular Communication

Open communication with all stakeholders, including employees, clients, and creditors, can help manage expectations and mitigate potential damage. Keep them informed about the company’s situation and your plans. Transparency can foster trust, empathy, and patience, which could prove vital in navigating through the crisis.

11. Proactive Debt Management

A crisis often necessitates taking on additional debt. If this is the case, proactively manage these obligations to avoid accumulating unmanageable debt. This might involve restructuring existing loans or negotiating payment terms with creditors. A well-planned debt management strategy will help ensure that the crisis doesn’t leave you with an insurmountable financial burden.

12. Prioritizing Tax Compliance

During crises, it’s tempting to overlook tax obligations, but failing to comply can lead to penalties and added financial stress. Ensure that your business continues to meet its tax obligations, and take advantage of any tax relief programs that may be available. A professional bookkeeper can help manage this aspect of your finances effectively.

13. Reinforcing Your Customer Base

Your customers are the key to your business’s survival. Even during a crisis, strive to provide superior value and excellent customer service. This will help maintain a loyal customer base, which will continue to generate income. Besides, happy customers are more likely to refer others to your business, providing a cost-effective way to expand your customer base.

14. Implementing Strict Budget Control

During a crisis, it’s more critical than ever to adhere strictly to your budget. Minimize non-essential expenses, and prioritize spending that directly contributes to maintaining operations and generating income. Monitor your budget closely and adjust as necessary based on changing circumstances.

15. Staying Flexible and Adaptable

Finally, a crisis often necessitates flexibility and adaptability. The ability to respond quickly to changing situations can be the difference between weathering the storm and going under. This might mean adopting new technologies, adjusting work practices, or even altering your product or service offering to better meet the needs of the market.

In conclusion, while managing small business finances in a crisis is undoubtedly challenging, it also offers opportunities for growth and development. It’s about more than merely surviving the crisis; it’s about harnessing the lessons learned to create a stronger, more resilient, and more successful business in the long term. As accounting professionals, your role in steering these small businesses through the storm is invaluable. And remember, after every storm, there’s a rainbow. With careful planning, strategic decision-making, and a resilient mindset, your business can not only weather the crisis but also thrive in its aftermath.

Strategies for Overcoming Crisis in The Hospitality Industry

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StrategyDriven Risk Management Article | Strategies for Overcoming Crisis in The Hospitality IndustryEvery organisation is likely to face a crisis now and again. Significant problems may arise once or twice a year, with smaller issues appearing sporadically in the time in between. Predicting what a crisis will entail is impossible in many situations – but it’s how a team prepares and responds that can dictate whether and to what degree a business recovers.

The Covid-19 pandemic is one obvious example of an uncontrollable crisis affecting almost every industry in one way or another. While many wise businesses will have a crisis management strategy in place, it’s a situation few could have directly planned for.

The hospitality sector has been among the hardest hit. Unfortunately, it’s also likely to feel the situation’s impacts the longest due to ongoing social distancing rules and a consequential reduction in demand and revenue.

Sales slumped by 87% in the second quarter of 2020, and despite tentative signs of recovery, over half of small business owners in the sector fear the pandemic will force them to permanently close. The situation has forced many to pivot their approach in order to survive – but effective crisis management could allow some to emerge stronger.

Below we discuss other uncontrollable factors the hospitality industry faces, as well as the strategies businesses can implement to overcome them.

What uncontrollable factors affect the hospitality industry?

The aforementioned Covid-19 pandemic has severely impacted what is perhaps the primary uncontrollable variant for the hospitality industry – flow of tourism.

Accommodation providers, food and drink establishments and other leisure facilities all rely on visitor numbers, but tourism can be fragile even in the best of times. Weather, political events, area decline and the arrival of competitors can all lead to unpredictable cashflow and a variety of other challenges from one season to the next.

Another variant looming large over the sector is Brexit. The hospitality industry is a large employer of migrant workers, but new regulations are likely to lead to problems with labour availability. It remains to be seen whether abolishing freedom of movement will also turn international tourists away.

Strategies for overcoming uncontrollable crises

Periodically reviewing plans is one important strategy for managing crisis. By building in trigger points to assess factors such as operational and market performance as well as basic financial metrics, a company can assess whether a long-term plan is still fit for purpose. In light of some of the events discussed above, this process can be vital in adjusting to new parameters to keep a company on track.

There are other practical steps that can be taken to prepare for the eventuality of a crisis. Taking out hospitality insurance with Gallagher for example can protect against damages to a commercial property or other unforeseen disruptions.

When such a situation does arise, establishing an effective solutions team allows a business to focus the right people on the task in hand. Members should have a clear understanding of their roles and ideally some of their typical responsibilities will be delegated. Electing forward-thinking individuals will help generate the most positive and proactive response.

With a crisis management team in place, wider communication is essential in keeping everyone working towards the same goal. Creating a clear ‘change story’ that all workers can understand and get behind – from front of house staff to board members – can be an important step in establishing a collective sense of urgency.

The hospitality industry is undoubtably facing a crisis right now – but with the right team and strategies in place, many will already be on the road to recovery. If you have any additional insights, please feel free to share best practices in the comments section below.

How To Be A Leader During A Crisis

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StrategyDriven Management and Leadership Article | How To Be A Leader During A Crisis

“The true test of leadership is how well you function in a crisis” (Brian Tracy). Now, more than ever, the world is looking to its leaders. The leaders of countries, communities, and businesses. What we need now are smart, focussed and compassionate leaders who can flourish in a crisis.

So what can you do if you’re responsible for a company or team during a crisis such as the one we’re currently experiencing with COVID-19?

Be Human

Great leaders aren’t emotionless robots. You need to have empathy for the way people are feeling right now. Many are worried about their jobs, the health of loved ones and dealing with their own mental health issues. Older employees may be especially worried due to the lack of clarity around the government stimulus package and will senior citizen get a stimulus check? You may share some or all of these worries and you need to express that.

Yes, there will be difficult choices ahead, but empathy is a major asset to any leader.

Stay Up To Date On The Situation

It is increasingly difficult to get an unbiased picture of what is happening at present. You owe it to your company to stay educated on the developing situation.

Don’t rely on social media of partisan news outlets for your information. Look for factual ones. The World Health Organisation (WHO) produces a Daily Situation Report which is helpful.

Don’t Get Defensive

You won’t have all the answers and you won’t always make the right decisions. Own it, admit it, apologize for it and do better.

If you don’t know something, admit it and go and find out what you need to know.

Becoming defensive can start a cascade of negative feelings from your employees that lead to mistrust and disengagement that will continue long after the crisis is over.

Communicate Regularly

Frequent communication is vital for all stakeholders. This includes employees, investors, clients, and board members.

Sit down for a moment and think about what each stakeholder would need to know right now and get them that information.

Regular communication, whether or not you have something new to say, is the key, even if you only confirm that nothing has changed.

Be Yourself

You are likely spending your days encouraging your employees to stay physically and mentally healthy while they deal with everything that’s going on around them.

Take your own advice, you are not immune to everything that is happening, you have the same worries and fears as everybody else.

If you’re a good leader, your employees already like you as a person for your skills, charisma, sense of humor and professionalism. Try and remember that and do your best to maintain these qualities when times are trying.

It isn’t easy to lead during a crisis. Even world leaders, with all of their advisers and resources, are displaying varying levels of competence at present.

The Big Picture of Business – Each Role Matters. The Value of Support Staff

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StrategyDriven Big Picture of Business ArticleEvery person in the company matters to its success. Every job is important, as is filling them with the best people for each job. The art and skill of being great support staff is a cornerstone of business success.

From pop culture, think of the great role models that we grew up watching:

Della Street was the loyal secretary to Perry Mason. She knew what everyone was thinking and was the glue to the cases. She was the model for executive assistants and office managers everywhere.

The CEO is made stronger with a good C-suite team. Ed McMahon was TV’s premier second banana. He worked as assistant, announcer, commercial pitchman and sketch narrator to Johnny Carson throughout their 29-year run on NBC-TV’s “Tonight Show.” They had previously worked together on a game show, “Who Do You Trust” on ABC-TV. Bandleaders on the late-night are vital #3 characters on the show, including Doc Severinsen, Skitch Henderson, Paul Shaffer and The Roots band.

The movie star heroes had buddies to help them navigate the adventures. John Wayne and Roy Rogers had Gabby Hayes. Gene Autry had Pat Buttram.

TV show stars had great support casts. Lucille Ball and Desi Arnaz had Vivian Vance and William Frawley as Ethel & Fred Mertz. This historic teaming became the formula for most other TV sitcoms. Shows like “The Mary Tyler Moore Show,” “30 Rock,” “The Office” and others had expanded ensemble casts.

Some performers made careers as supporting players. Ann B. Davis was Schultzy on “The Bob Cummings Show” and Alice on “The Brady Bunch.”

Back characters on TV shows included restaurant and bar operators, where the stars went top relax. There were friendly, familiar places such as Cheers bar, Arnold’s Drive-In on “Happy Days,” the Krusty Krab on “SpongeBob Square Pants,” Dale’s Diner on “The Roy Rogers Show” and other homey places. In the business world are those staff people who make us feel more like family. Therefore, our loyalty to the company rises, and we are more productive.

Still other back characters bring cohesion to the enterprise. On “Gilligan’s Island,” those glue-adhesive characters were the Professor Roy Hinkley and Mary Ann Summers. Those vital employees in the business world might include the IT guy, the receptionist, the mailroom manager, the ethics adviser and the secretary to the Board of Directors.

Great executives know the value of crediting support figures for the business success. Lt. Columbo was always quoting his wife as basis for testing hypotheses, though the character was never shown. Newspaper publisher Perry White was always upstaged by his employees, notably Clark Kent/Superman. Al Roker does the weather on “The Today Show,” and he is also the motivating segment host as well. Nobody turns letters like Vanna White, making her essential to the legacy of “Wheel of Fortune.”

And then there were those mentors behind the scene who were responsible for lots of creativity. The Beatles had George Martin as their producer. Steven Spielberg had John Williams as music composer for his films.

A host of people make the CEO look good. Further, they transform the company to greater plateaus. Warmly recognize the contributions of executive assistants, trusted advisers, mentors, support staff, hier apparents, adjuncts, vendors and outside stakeholders.

Here are some characteristics of support personnel and rising stars who will make it as professionals and business leaders:

  • Act as though they will one day be management.
  • Think as a manager, not as a worker.
  • Learn and do the things it will take to assume management responsibility.
  • Be mentored by others.
  • Act as a mentor to still others.
  • Don’t expect status overnight.
  • Measure their output and expect to be measured as a profit center to the company.
  • Learn to pace and be in the chosen career for the long-run.
  • Don’t expect that someone else will be the rescuer or enable you to cut corners in the path toward artificial success.
  • Learn from failures, reframing them as opportunities.
  • Learn to expect, predict, understand and relish success.
  • Behave as a gracious winner.
  • Acquire visionary perception.
  • Study and utilize marketing and business development techniques.
  • Contribute to the bottom line, directly and indirectly.
  • Offer value-added service.
  • Never stop paying dues and see this continuum as “continuous quality improvement.”
  • Study and comprehend the subtleties of life.
  • Never stop learning, growing and doing. In short, never stop!

About the Author

Hank MoorePower Stars to Light the Business Flame, by Hank Moore, encompasses a full-scope business perspective, invaluable for the corporate and small business markets. It is a compendium book, containing quotes and extrapolations into business culture, arranged in 76 business categories.

Hank’s latest book functions as a ‘PDR of business,’ a view of Big Picture strategies, methodologies and recommendations. This is a creative way of re-treading old knowledge to enable executives to master change rather than feel as they’re victims of it.

Power Stars to Light the Business Flame is now out in all three e-book formats: iTunes, Kindle, and Nook.

The Big Picture of Business – Ethics… Good for Business

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StrategyDriven Big Picture of Business ArticleIn order to succeed and thrive in modern society, all private and public sector entities must live by codes of ethics. In an era that encompasses mistrust of business, uncertainties about the economy and growing disillusionments within society’s structure, it is vital for every organization to determine, analyze, fine-tune and communicate their value systems.

Corporate Responsibility is more than just a statement that a committee whips together. It is more than a slogan or rehash of a Mission Statement. It is an ongoing dialog that companies have with themselves. It is important to teach business domestically and internationally that:

  1. We must understand how to use power and influence for positive change.
  2. How we meet corporate objectives is as important as the objectives themselves.
  3. Ethics and profits are not conflicting goals.
  4. Unethical dealings for short-term gain do not pay off in the long-run.
  5. Good judgment comes from experience, which, in turn comes from bad judgment.
  6. Business must be receptive–not combative–to differing opinions.
  7. Change is 90% beneficial. We must learn to benefit from change management, not to become victims of it.

Corporate Responsibility relates to every stage in the evolution of a business, leadership development, mentoring and creative ways of doing business. It is an understanding how and why any organization remains standing and growing…instead of continuing to look at micro-niche parts.

Integrity is personal and professional. It is about more than the contents of a financial report. It bespeaks to every aspect of the way in which we do business. Integrity requires consistency and the enlightened self-interest of doing a better job.

Financial statements by themselves cannot nor ever were intended to determine company value. The enlightened company must be structured, plan and benchmark according to all seven categories on my trademarked Business Tree™: core business, running the business, financial, people, business development, Body of Knowledge (interaction of each part to the other and to the whole) and The Big Picture (who the organization really is, where it is going and how it will successfully get there).

One need not fear business nor think ill of it because of the recent corporate scandals. One need not fear globalization and expansion of business because of economic recessions. It is during the downturns that strong, committed and ethical businesses renew their energies to move forward. The good apples polish their luster in such ways as to distance from the few bad apples.

Corporate Responsibility means operating a business in ways that meet or exceed the ethical, legal, commercial and public expectations that society has of business. This is a comprehensive set of strategies, methodologies, policies, practices and programs that are integrated throughout business operations, supported and rewarded by top management.

Corporate Sustainability aligns an organization’s products and services with stakeholder expectations, thereby adding economic, environmental and social value. This looks at how good companies become better.

Corporate Governance constitutes a balance between economic and social goals and between individual and community goals. The corporate governance framework is there to encourage the efficient use of resources and equally to require accountability for community stewardship of those resources.

As part of strategic planning, ethics helps the organization to adapt to rapid change, regulatory changes, mergers and global competition. It helps to manage relations with stakeholders. It enlightens partners and suppliers about a company’s own standards. It reassures other stakeholders as to the company’s intent.

About the Author

Hank MoorePower Stars to Light the Business Flame, by Hank Moore, encompasses a full-scope business perspective, invaluable for the corporate and small business markets. It is a compendium book, containing quotes and extrapolations into business culture, arranged in 76 business categories.

Hank’s latest book functions as a ‘PDR of business,’ a view of Big Picture strategies, methodologies and recommendations. This is a creative way of re-treading old knowledge to enable executives to master change rather than feel as they’re victims of it.

Power Stars to Light the Business Flame is now out in all three e-book formats: iTunes, Kindle, and Nook.