sorting through balance sheets“Honesty is the first chapter in the book of wisdom.” – Thomas Jefferson

2020 has been a crucible for businesses of all sizes. Alberta businesses know that we’ve been among the hardest hit, with many facing a long winter on the brink of insolvency.

The Federal government has been coming to our aid with blunt, expensive tools meant to shore up balance sheets until the revenue returns. 

There’s been an arsenal of relief measures, from the all-important CEWS to the RRRF, BCAP, CEBA, and CERS. There’s been bridge financing, interest-free loans, emergency credit, and support for Northern, Indigenous, and Black-owned businesses.

Chances are that you’ve benefitted or are befitting from one or more of these. They’ve been going on for months, and when a process happens for that long, we’re in danger of thinking of it as “baked in” to your everyday operations.

But here’s the difficult question of the day: Are you prepared for when the money tap turns off?


Statements Matter

If a random stranger donates $10,000 to your business, you don’t blend it into your general revenue. You bracket it out as extraordinary income because it was a “one-off” and you can’t make reliable business decisions based on that.

Random strangers in Ottawa have been giving you gifts for months. They’re one-offs, and they’re recurring, and that makes them dangerous.

After many months, these funds will bake themselves into our business model if we’re not careful. It’s a psychological trick: when a process recurs, it doesn’t take long to assume it will continue to occur.


why you should keep extraordinary income separate

You can fight this creeping assumption by keeping extraordinary income where it belongs: outside your labour, overhead, or other “above the line” rows. If it becomes invisible and lost in other numbers, you’ll start to subconsciously let it affect your planning.


Plan Without It

The brutal honesty comes when you sit down to plan how you’ll move forward once the money taps are off. Imagining our business – the one we’ve invested years of our mental and resource equity into – in mortal danger is one of the hardest things we can do. And government payments make it easier to keep looking the other way. 

After all, the money is right there on the balance sheet. 

Go into your statements, grind your teeth, and remove all the government dollars.

As hard as it is, it’s vital to chart the financial future of your business with no government help. Go into your statements, grind your teeth, and remove all the government dollars. The revised bottom line will be what will happen when (not if) that money stops flowing.

Now is the time to make the decisions that need to happen to make your business independently sustainable in the long term. Find the waste, rework the business model, make the needed cuts. Once you do that, you’ll sleep better at night knowing that, even if your business looks different than it did a year ago, you control your own financial destiny.