Moving your exit “V” curve, let’s revisit our exit strategies

The impact on the economy of lock down has been significant, possibly the most significant since the 1700’s. We’re told that the economy will bounce back and that the shape of the curve will be a “V” shape. 

Whilst the inward shape of the curve in terms of the gradient is now known the exit curve is not. Clearly the bounce back is not going to be as steep and probably different for each industry (and business within) as restrictions are relaxed. 

In order to understand your cash requirements until restrictions are relaxed and through the initial opening you should be putting a cash flow forecast together and updating it on a weekly basis. 

But that’s operational and I want to talk about strategy. 

Let’s say that based on government advice and modelling you have forecast your outward “V” curve, your anticipated cash inflow from sales. On the graph below this is the red curve. It’s your base income forecast. 

My challenge to clients is to now identify ways you can steepen the gradient (i.e. increase the pace of recovery – green line) or move it forward (i.e. create income ahead of your base forecast – blue line).

One step to the left!

I’ve talked to dozens of small business owners who are currently closed but are finding legal ways to create income streams, such as cafe’s selling take out pizza or meals etc. They are moving their “V” curve, creating income ahead of where they might expect to and getting ahead of their base forecast.

The blue curve is the effect of this. There will be new ways of generating income by either delivering new products and services or delivering existing products and services in new ways whilst restrictions are in place.

Keep running up that hill

I’ve talked to other business owners who are thinking of ways to reopen with a bang, ensuring that when they do open income is maximised in whatever way they can. One of my clients, a small hairdressing business, is actively starting to fill a virtual appointment book ensuring that their clients have a place booked for when they reopen and guaranteeing their income. They are not waiting for customers to come to them!

The green curve is the effect of this. There will be ways of selling more to existing customers or attracting new customers.

A word of caution

The one vital boundary to bare in mind when starting to identify ideas is trust. Being responsible, in terms of applying government guidance will be a vital part of long term sustainability. Businesses that flout rules and guidance, in their “customers minds”, may be dealt a significant blow when those customers come to make their next purchasing decision and vote with their feet.

So in summary, strategic thinking around your exit “V” curve could be a way of finding your way through and out of restrictions maximising revenue and cash at this important time but also identifying new ways to generate sustainability.

If you’d like to talk this through please contact Richard Hallsworth on 01522 815100 who would be happy to have a virtual coffee with you.

Posted in Blog, Business Planning, Cash Flow, Covid-19.