As this global health crisis continues to dominate everything we do in business and our daily lives, finding the best way to move forward is paramount. How companies react to the stresses of this time will have profound effects on how they perform in the future.
Strategy is a trying game, and prioritizing initiatives makes things even more difficult. Businesses need to make the right calls in tough situations. Timely analysis is a key to understanding where we are and where we need to go. Getting these critical tasks done internally is enough of a challenge, but companies are also finding that they need to communicate these decisions with outside entities.
Communicating your strategies during a meeting with banks or investors requires being able to clearly demonstrate how you came to your conclusions. You need to justify your priorities and give them the information they need to connect the dots too.
Setting priorities investors will understand
Getting an accurate assessment of your cash flow now will help determine where your business is and what it currently needs.
With an accurate forecast, you will know what your gaps are so you can start working to bridge them. If you need to raise capital, banks and investors will see exactly why you are looking to do so, and exactly how much you really need. With critical vulnerabilities laid bare, they will see what they are and how easy it will be to fix them. Outside parties will see that you took the time to differentiate which priorities are critical, which are important, and which are merely desirable.
You will be able to show them that your objectives are in order, you will have the resources to pull them off, and you have considered the proper timing. Having a clear sense of what you want to accomplish brings weight to your initiatives.
Planning for the resources that will need to be set aside shows the strain that you will be operating under and how urgently you need support. Getting your timing right at this critical time will ease their worries that you may flounder as this crisis persists. The banks or investors will have a better idea of whether or not investing in you should be a priority for them.
How aggressive you can be in your strategy comes out in the numbers too. A proper forecast will show them how confidently you can pursue long term goals while keeping the day to day upkeep in check. You will be able to continue to pull your company towards a brighter future and justify your optimism.
The different avenues you can explore are apparent as you demonstrate what resources you have. They see how much room you have to work. When the hard calls come, you will be able to make them, and clearly show the reasoning behind your choices.
Transparency is more important than ever
Whether you need to meet with banks and investors to raise capital, address debts, or just keep them updated on current operations, those entities will feel much more comfortable if you are transparent with them.
Demonstrate you are a better match for funding as competition grows for limited bank resources. As more businesses feel the stress of this crisis, banks will be becoming inundated with requests for bridge loans and pleas to provide operating capital. Being transparent allows the bank to see exactly why you need money, where it is going to go, and how close you are to losing everything. Banks will feel more comfortable with their assessment of how much of a risk you are, which can move you up the list.
Transparency also keeps investors happy so that they don’t pull out. They won’t worry as much that things will go south or that you are secretly crumbling. If you are looking to raise capital from them, they will be more willing to double down on you going forward.
They will want to clearly see what your cash flow looks like for operating activities and what the forecast looks like for the future. They want to see if you are actually making money and whether you will be able to make payroll next week. They want to see prospects for the near future, to see how stable you are. They want to know if you are already over-leveraged from investing activities or previous financing. By proving that you can meet your debt service, you will be more worthy of them taking a chance on you.
As this crisis continues and lagging effects catch up to an already sluggish economy, this will become even more important. Being able to demonstrate the opportunities that your business will have in the near future with clear cashflow forecasts will be necessary. These entities want to see how you evaluate resources and focus on high-value sales.
They want to see an accurate assessment of the risks that you are facing. If a cash shortfall is imminent, they want to know how bad it is likely to be and how you will react to it. Banks want to know if you can avoid falling behind and being late on payments. Investors want to know if you are having trouble collecting payments from customers. If you require financing, they want to know what you need and why you need it.
With our economy on unsteady ground, the likelihood that your business may need to meet with banks or investors for help is understandable. As these acts of desperation become commonplace, it will be important for you to stand out from the crowd and offer them a clear transparent explanation of what your situation is.
Having the ability to show your current cashflow and automatically forecast it will be instrumental in convincing another entity to take a risk on your business. That’s why when it comes to demonstrating your cash flow management, using specialized tools like Dryrun can help. Try us out for free to see the difference financial forecasting can bring to your business.