The economic impacts of Coronavirus (COVID-19) are hitting businesses across Australia and globally. Some businesses are struggling to secure cashflow, while others are taking advantage of sudden opportunities. As restrictions ease and businesses return to operate as close to normal as possible, how do you work through the next wave of unknown factors that may challenge your business?
Below we outline a simple 5 step plan to surviving the next 6 months:
1. Address the immediate challenges facing your workplace with your team returning to the office
Align key persons in your business.
Whilst your employees worked from home, it’s likely the key players in your business rose to the challenge of keeping their teams operational. It’s important as you return to work that you continue this trend and empower your senior leadership team to continue to lead their teams.
What you did well when you were at home should be implemented when you return to the office. Having your leadership team take charge will allow you to remain flexible in how you manage your own time to deal with other challenges your business may face.
Empowering your team.
Maintaining morale and promoting self-care may be one of the most critical new responsibilities for business leaders. Make the health and well-being of your team a priority, so then they can take care of their job more effectively.
Communicate with your clients and employees clearly and often.
Ensure that you have a clear communication plan to address any business changes or disruption with your team members, ensure that all of your team are clear on who needs to be told what and when. Then relay this message to your clients as required.
People are open to hearing new ideas and solutions as they want to keep the wheels of their business turning as much as possible. Be a useful source of information for your clients during these challenging times, without expecting an immediate return.
2. Plan for continued revenue disruption
Plan for multiple quarters of lower revenue.
As restrictions ease be mindful that it may not result in improved revenue for your business. Listen out regularly for the impacts of COVID-19 and continue to project for any future impacts as well. Attempt to quantify how these may affect your own business and implement strategies to mitigate.
Conduct 3-6-month scenario planning (model revenue-decline and stress-test Profit and Loss scenarios).
We recommend that the best way to project your future Cashflow is using the three-way forecasting and modelling system. This looks to consolidate three key reports in your accounting and use the combination of these to project future forecasts. This is the profit and loss, balance sheet and Cashflow forecast.
Continue to look at what you need to do to manage your expenses. It’s likely with the return to office that some of your office expenses will increase, make sure you continue to monitor all non-essential spending and if you haven't already speak to your Accountant, they are your lifeblood right now and can help you take advantage of the Government Stimulus Packages that have been released to help with cashflow over this period.
3. Accelerate or increase the cash you are receiving
Collection of debtors.
Contact your clients and customers to encourage them to pay early. You can incentivise them by offering discounts. Where clients themselves are experiencing Cashflow difficulties, you might consider negotiating periodic payments.
Receiving a Government Grant or Incentive can be a great cash boost for your business. Here are a few tips for your Grant Application:
- Make sure you are eligible.
- We recommend speaking to experts that understand the rules and can guide you with your application (or even do it for you).
- You have to make sure you keep records.
- Make sure you answer all the questions that they request as part of the Grant application succinctly and to the point.
- Make sure that you can substantiate your claim.
Related: Government Grants and Incentives: Which one is right for my business?
New Bank loans and funding for businesses affected by COVID-19.
If your business has been affected by COVID-19, you may be eligible for a payment of between $20,000 and $100,000 or a government-guaranteed loan of up to $250,000. The Government is partnering with the banks and other lenders by guaranteeing 50% of loans of up to $250,000 for 3 years to businesses with an annual turnover of less than $50 million.
These are unsecured loans and won’t require any repayments in the first 6 months. The purpose is to help small to medium businesses rebuild and recover on the other side of the CoVID-19 crisis. To find out more about Grants, Loans and Financial assistance for Small Business visit Service NSW >
4. Be careful with the cash you are spending
Look at all current and future business expenses. What are essential and what money can be saved? In this environment cash is king, so ensuring that you can maintain Cashflow is imperative. Look for any opportunities to cut costs to help your business through this period. Get rid of all non-essential spending. Business owners should review their Profit & Loss statement and look for savings that can be generated by cutting discretionary overheads.
Related: Cashflow is a lifeblood or your business, especially during a pandemic such as Coronavirus
5. As you return to business as usual, design a plan that adopts your business to the “new normal”
Be resilient. Be prepared.
Business should review or develop their COVID-19 business continuity plan. Businesses that address the issues head on through contingency planning, will be far more likely to create resilience and be able to revive quickly.
Having a fully comprehensive business continuity plan (BCP) in place and ready to be rolled out is crucial in such a scenario. can identify the potential threats to an organisation – from pandemic to supply chain disruption – and analyses what impact they may have on operations and business objectives.
Protecting employees as they return to the workplace.
- Practice social distancing within your workplace.
- Promote good hand hygiene.
- Hold only essential meetings.
- Modifying roster or staffing to reduce staff interactions (i.e. smaller groups, staggered rosters)
- If you still haven't, develop a policy that requires staff to stay home if unwell (allow remote work in those cases).
- Support employees with high-risk and allow them to work remotely.
- Make sure the policies you implemented when COVID-19 hit are still in place to handle any re-occurrence if wave two hits.
Have you noticed our #FridayExpertTips... here's one that relates to #CoVID-19: Business Planning
"In times of crisis we often focus on ourselves and our own issues. However, in order to fully understand the long and short term impacts on your business, you have to understand the impact on those around you – your team, business partners, customers, industry, niche... and adjust accordingly."