It’s been just over a year now since our world dramatically changed. We all were forced to think outside our usual boxes, in life and in business. Was it all good? Absolutely not, but was it all bad? I don’t think so. As with most things, there has been some good to come from it. From a business perspective, the pandemic pushed many ecommerce owners to evaluate how they were doing business; how they were managing their cash and planning for the unknown. These are vital components of a successful business, in times of crisis as well as times when things are moving along the way they should.
If you made it through this past year with few scars and money left over, then give yourself a huge pat on the back! You most likely had your plan in place already and were prepared for the uncertainty the pandemic was about to unleash. If you weren’t so lucky, but managed to scrape by, it’s never too late to implement that plan so you’re ready for the next inevitable wave of uncertainty. Let’s show you how!
Prepare Your Ecommerce Business for Uncertain Times
As we’re taught in Profit First, the keys to managing your business during a crisis can be found in data and planning. Start with an evaluation of your business around cash flow. Once you complete your evaluation, you will have a better idea about the actions you need to take.
I believe your first actions, or priorities, should revolve around understanding what is important to you. Obviously, your family and health will always come first. Your team and your business should be next in line. Cash is the lifeblood here, so you must preserve and protect it.
Next, you need to get granular and plan out the next 90 days. This is where you implement the 13-week cash flow plan. This is important. What do you expect will be coming in and what will be going out? What can you do to improve the cash inflow and how can you reduce the cash outflow? Remember, your objective here is to preserve cash as long as possible.
What is the 13-week Cash Flow Plan for Ecommerce Sellers?
Our team developed this tool that we have been using with clients for a quite a while to advise them on cash flow planning. When the pandemic first hit last spring, we began refining that tool, knowing that many ecommerce businesses would be in need of such a tool to help them weather the crisis. We shared the tool through our blogs and our Cash Flow webinar with our colleagues at A2X Accounting.
The webinar was geared towards ecommerce sellers, but the 13-week plan can easily be applied to most any business.
As we work with our clients in these situations, we recommend they work first to understand their cash run rate or cash buffer. How much cash do you have on hand or can get to easily? I’m not talking inventory. Inventory is not cash. I’m talking funds in a bank or a line of credit, etc. Once you have that total, you can determine how long it will last if you had to continue business expenses as usual. That data point lets you begin to frame some of your other decisions. If you basically have no buffer, then you need to be letting employees go as quickly as possible, as difficult as that may be.
Plan Now for Peace of Mind Later
Download the 13-week Cash Flow spreadsheet and create your plan, beginning NOW. If you need help, watch the webinar by clicking here. Put your plan in place now and you’ll be well prepared for whatever uncertainty lies ahead!
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If your ecommerce business isn’t where you’d like it to be in terms of profitability, check out my book, Profit First for Ecommerce Sellers. It answers important questions about how to implement Profit First in an ecommerce business. Take control of your money and your business, and put Profit First to work for you!
You can also sign up for the Profit First for Ecommerce Sellers Online Course. As a Mastery Level, Certified Profit First Professional, I will teach you why Profit First works so well for ecommerce businesses and the particular challenges for businesses that have physical products requiring inventory management. You will learn how your behavior drives your money management habits for your business and how you can set up your business bank accounts to work with your habits.
Check out all of our ecommerce accounting and profit advising services here!