1. Get a War Chest
Before Covid-19 everything was going well and on track as per my plans. After arguably 10+ years of a good economic environment I had come to expect that these good times would last forever. While no one could have predicted Covid-19, I think a lot of businesses were caught short, with less money put aside to ride out an economic crash that was inevitable at some point.
Thankfully our business model and low-ish fixed costs will allow us to ride out what could last a couple of years. However, not without some changes and tough decisions. It was reported early on during the crash that an average UK restaurant had just 16 days' worth of cash to fund operations. So if they made no sales and couldn't raise money, they'd be out of business after 16 days which seems crazy. Within my first business we had costs close to £100,000 some months, of which a lot were fixed costs. If Covid-19 had hit while I was running that business we would have been out of business pretty quickly.
The lesson learned - to make sure the business has a war chest (cash) that will cover basic running costs of the business for at least 6-12 months. As we continue to grow and our costs increase I will add to the war chest so we always have enough money to keep going for at least 6 months without any income. I am going to follow a similar strategy personally so I can cover personal outgoings with no income for at least 1 year.
2. Cut the fat
Before Covid-19, I thought I ran a pretty tight ship with regards to business costs. I believed that the team and I only spent money that we needed to. I'm not talking about marketing or investments, but day-to-day running costs. As soon as Covid-19 happened, the first thing for me to do was to get a full understanding of what we had coming in and going out, to work out how long we could sustain ourselves without any other funding and a possible loss in revenue. I soon realised we had old subscriptions we didn't use anymore, we were overpaying on some basics and had other outgoings that we simply didn't need. Again, I had got lazy while times were good and some easy cost-cutting will save us thousands of pounds over the next 12 months, with no impact on the business.
The lesson learned - don't get lazy with financials. I am now looking at our monthly profit and loss statement a lot more closely. It's no longer a report that sits in my inbox for a few days before I dissect it. Even when things return back to normal, I am going to make sure there's no unnecessary fat in our business. It got me thinking, I wonder how much some of the UK's largest companies could save if they went through everything with a fine-tooth comb and cut out the fat.
3. Don't be a fly
This lesson took longer to work out than the previous two which were pretty obvious, pretty quickly. Once the initial panic of Covid-19 and the impact on our business had become clear, we continued pushing forward as planned with some small changes. The success of client campaigns and within our own business started to take a dip, but we continued to push forward. It became more and more clear as the days and weeks went on that we needed to change strategy for our clients' marketing and our general business strategy. After slowing everything down (which felt unnatural), we were able to take the time to put a new strategy in place and as a result, both our client campaigns and business have improved.
The lesson learned - don't be a fly. You will have seen a fly trying to get out of an open window. They repeatedly fly into the glass over and over again trying to get outside, when the window is open and usually very close. If they took the time to slow down and observe their surroundings, they'd see the window was open, saving them a lot of time and energy. Far too often, I think businesses fail to slow down in order to speed up (ours included). Best case: the fly gets out the window after 20 minutes of trying with far less energy. Worst case: it never makes it out (we all know what happens then.) During and after this pandemic, I want to be the fly who got out with minimal effort by slowing down to speed up (even if it feels unnatural) ... not the dead one on the window ledge.
See some of the other learnings taken from my first business The University Paper: ' Biggest mistakes I made scaling the business '
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