You probably remember that line from the 1970s Jaws films based on the Peter Benchley book. It came to my mind when I was listening to the government announcing the easing of the coronavirus lock-in.

Some people are even calling 4^th July Lockdown Liberation Day.

To me, liberation – like VE Day - is for when something is over. Covid-19 is far from that. There is no vaccine and still no effective test and trace system.

So, on what basis is the lock-in being eased? Where is the data that says it’s safe?

I am naturally optimistic, but cautiously so. I like to check the facts. As an accountant I was trained to gather, analyse and interpret data. It is an essential skill in my profession. So when the mayor of Amity (in Jaws) – fearing for the impact on the local economy - said ‘The beaches are open’ and ‘It’s safe to go back in the water’ I’d have pointed out that was his interpretation but where was the data on which it was based? (I know it’s a film but you get my point).

A bit like easing the lock-in. Unless data is accurate, reliable and tested decisions taken upon it will be bad ones.

Which applies to your business as well. Too often business owners take decisions based on data which is:

• Out of date (annual rather that monthly accounts);
• Inaccurate (too many estimates); and
• Misleading (not properly integrated).

It is no wonder businesses fail. When they do the owners usually blame someone else: the economy, the government, their bank, the weather or - failing all else - the man in the moon!

Usually it is no-ones fault but theirs; the warning signs were available if they had had the data and were able to analyse and interpret it correctly.

So here’s my question. If the tools are available (which they are) to produce accurate financial information and the resources exist (which they do) to analyse and interpret that information, why do so many businesses fail because they didn’t see the warning signs soon enough and take corrective action?

During the next few months a lot of businesses will fail. For some – probably a minority – it won’t be their fault. For most it will. They will be those who:

• Didn’t think they could possibly survive;
• Didn’t think of ways to pivot and keeping the tills ringing;
• Didn’t think it was possible to restructure ; and just
• Didn’t think.

Fortunately it isn’t too late. Here is my list of ten actions to take and questions to ask:

1. Install a cloud accounting system such as Xero (it takes less than half-a day) and link it to your bank account;
2. Obtain weekly sales, expenses and cash flow figures;
3. Prepare a cash flow forecast for the next 3, 6 and 12 months;
4. Defer payment of all taxes (the government isn’t going to go bust);
5. Ask how can I lower my break-even point?
6. Ask how can I reduce my overheads (even if it means upsetting some people)?
7. Take out a Bounce-back or CBILS loan;
8. Ask how can I generate additional income from my customers even though they can’t visit me;
9. Ask how can I increase my marketing expenditure - yes increase -so I get a positive ROI?
10. Speak regularly to your accountant or bookkeeper (to make sure your analysis of the data is accurate).

Most of your competitors won’t do half of these things, if any. Winners will.

Stay safe.

Noel Guilford