Amazon Cash Flow Management: What To Do in a Crisis

During this time of crisis in our world, business owners are preparing for a recession. We have been here before—2008 for the housing collapse and 2001 after the 9/11 attacks. If you’re feeling shocked and desperate and don’t know what to do next, may it help to understand how recessions have worked in the past.

The Business Crisis Trend

Here is a graphic developed by Mike Michalowicz that shows how businesses move through a crisis. If you’re feeling desperate, you’re right on schedule!

Evaluate Your Priorities

However, you don’t want to stay there. Data and planning are the keys to managing your business during this crisis. Now is the time for evaluation. Once you begin your evaluation, you can have a better idea for the actions you must take.

Right now, we believe your actions first should be about understanding what is important to you. Your family and health will always come first. Next, your team and your business. The lifeblood is cash, so you must preserve and protect it.

We recommend our clients first understand their cash run rate or cash buffer. How much cash do you have on hand? How much can you access easily? This is not inventory. This is dollars 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 unfortunately need to be letting employees go as quickly as possible. Unemployment varies by state, but the Federal stimulus will help them now and for the next few months.

Create Your 90-day Amazon Cash Flow Management Plan

Next, you need to get granular and plan out the next 90 days. Develop a 13-week cash flow plan. 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? Your objective is to preserve cash as long as possible.

You Can Survive This Crisis

If you’d like more details about how to manage your cash during these difficult times, take a look at our Guide for Financial Uncertainty. It includes eight key steps to help you get a handle on your numbers. It also includes recommended steps for strategic planning and debt management. These three things combined will help put you on the right path to get through this crisis and be better prepared for the next one.