Operations & Systems
The time to prepare for a slow period is before it starts
Downturns come in many forms: a poor season, a local slowdown, a big customer cutting back, a sector in trouble, an economic shock. Owners who have thought it through act early and calmly. Those who have not tend to wait, hope and then cut hard. This session is a practical way to prepare, without panic and without pretending anyone can predict the next one.
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Panic is expensive. A plan is cheap.
When sales drop, the first reaction is often to wait: maybe next month will be better. By the time the owner decides to act, cash is lower, options are fewer and the cuts have to be deeper. The opposite reaction, cutting everything at once, can damage the parts of the business that would help it recover.
A simple plan agreed in a calmer time makes both mistakes less likely. It does not need a forecast. It needs a clear picture of your cash, your costs, your customers and your suppliers, and a few agreed points at which you will act.
This session is general awareness, not financial advice. For decisions about loans, tax or restructuring, speak to your accountant or a qualified adviser.
What the session works through
35 topics across 7 areas. Seven things to prepare, in a sensible order.
How Long Could You Last?A rough runway, in weeks.5
For illustration only, with made-up numbers: if fixed costs are ₹2 lakh a month and you hold ₹6 lakh with no income, that is roughly three months. If you assume income halves, the runway is longer. Try three cases: sales fall by 20, 40 and 60 per cent.
- Money you have available now, in the bank and in hand
- Fixed costs you must pay every month: rent, salaries, loan instalments, utilities
- Money you expect to collect from customers, and when
- Money you owe and when it falls due
- A simple runway: available money divided by weekly fixed costs, with sales assumed lower
Sorting the CostsThree baskets.5
- Essential: without it the business stops or breaks a legal duty
- Flexible: can be reduced, paused or renegotiated for a time
- Optional: could be dropped without harming customers
- For each flexible cost, how fast it could be cut and what it would cost to restart
- What you can see now that you do not use
Cutting is not always the answer. Cut what customers will not notice first.
Customers: Collect, Communicate, Stay CloseYour customers are your best early-warning system.5
If you supply registered micro or small enterprises, or you are one, delayed payment rules may apply. Under the MSMED Act, 2006, buyers are expected to pay within the agreed period, which cannot exceed 45 days from acceptance, and delayed payment attracts interest; see the government's MSME Samadhaan portal for the current position and the claim process. Check current rules with your accountant.
- Chase overdue payments early and politely
- Agree payment terms clearly before delivery
- Talk to your largest customers about their plans
- Keep service and quality steady, because people remember who was reliable
- Look for demand shifting to cheaper or smaller versions of what you offer
Suppliers: Early and Honest ConversationsBetter to ask than to go silent.5
- Telling a key supplier early if a payment will be late, with a date
- Asking for revised terms before you are in difficulty
- Checking whether your suppliers are under strain themselves
- Keeping your best suppliers paid on time where you can
- Reviewing orders and stock so you are not holding too much
People: Communication and FairnessHow you treat people in a slow period is remembered.5
- Telling the team the truth about the situation, calmly
- Considering options that protect jobs, such as reduced hours, before reducing numbers
- Protecting the people with skills that are hard to replace
- Checking employment obligations before any change
- Asking the team for ideas, because they often know where money is wasted
Take advice on employment rules before reducing pay, hours or staff.
Trigger Points and ActionsDecide in advance, so you do not argue with yourself later.5
- Sales below an agreed level for two consecutive months
- Runway below an agreed number of weeks
- A major customer reducing orders or paying late
- Each trigger paired with a specific action and a named person
- A date to review the triggers
What to Protect, and What to Look ForDo not starve what will bring you out of the slowdown.5
- Product or service quality, and the customers who rely on it
- A minimum of marketing and customer contact
- Your best people and their morale
- Relationships with suppliers and lenders
- Opportunities that appear: customers leaving weaker competitors, cheaper assets, new needs
Bring to the session
- Your bank balance and an honest list of fixed monthly costs
- A list of money owed to you, with ages
- A list of money you owe and due dates
- Your last twelve months of sales, month by month
- Any loan terms and repayment dates
What the session does not do
- Predict a downturn or say when one will come
- Give financial, tax, lending or legal advice
- Recommend any loan, scheme or investment
- Ask anyone to share figures with the group
How the session runs
A practitioner works through the runway calculation and the three cost baskets with made-up figures. Participants then do their own calculation privately, using three sales scenarios, sort their costs, and write two or three trigger points with actions. The session closes with a short discussion of what each participant will protect in a slow period, and one thing they will do within the week.
What your students leave with
- A plain estimate of how many weeks you could operate if sales fell sharply
- Costs sorted into essential, flexible and optional
- Trigger points agreed in advance, with the action each one sets off
- A plan for customers: collections, communication and staying close
- A plan for suppliers and staff: honest, early conversations
- A list of what you will protect even in a bad quarter
Scheduled sessions
Nothing scheduled yet
Sessions are arranged with a college once a date is agreed. Ask us and we will find the right person for it.
A student rather than a college? See what is coming up, or ask your placement team to host this.
Prepare while things are fine. Act early when they are not.
Tell us who your students are and what stage they are at. Sessions are free for participants.