Many people are talking about life after JobKeeper and what happens beyond April 2021.
Did the government’s support package keep the wolves at bay in your business over the past 12 months? The truth is that the JobKeeper scheme was of great support to many businesses during the Covid pandemic. It has kept many businesses alive over the last extraordinary 12 months.
Nevertheless, according to the Australian Bureau of Statistics, one in ten business owners currently securing Jobkeeper for their employees has revealed they plan to shut up shop when the wage subsidy runs out, at the end of March 2021, forcing workers to join queues for unemployment benefits. Rates from financial institutions will not remain as low as they are now, and loans will be called in. Though government packages such as the Small and Medium Enterprises Guarantee Scheme (SMEG) and the Instant Asset Write-Off (IAWO) have been extended, these will not last forever.
Without significant new government financial support, many businesses that continue to be adversely impacted by Covid, particularly in the tourism, travel, wholesale and retail industries, will come under renewed liquidity and employment pressures from April this year.
The good news is that if you think you are one of those business owners, you are not alone. Nor is it a given that your business will fold.
Here are some top tips that may help your business SURVIVE well beyond Jobkeeper.
Communicate with your team
Keep all your staff, customers, suppliers and creditors abreast of the contingencies you will implement to help your business survive and, if needed, negotiate new feasible contracts and terms and conditions. It will not only give everyone an understanding of where you are at, but will build trust and a spirit of collaboration and cooperation in the challenging times ahead.
Funding
Engage with your bank or lender to discuss your funding needs or a repayment/interest rate relief, or seek alternative finance.
Be on top of your cashflow
Where possible, cut costs to minimise further impact on your cashflow. Take into account whether you will be able to meet both operating costs and deferred payments such as rent, mortgage and tax. This will require calculating whether particular revenue streams will recover and whether you can benefit from leveraging opportunities for new streams.
Do you have good spreadsheet skills? If not, employ someone trustworthy who does, because survival will depend on a daily checking of cashflows and liabilities. Consider reducing headcount spend and outsource business functions such as Accounting.
Related: Cashflow is a lifeblood of your business, especially during a pandemic such as Covid
Seek expert support if you are struggling with finances
Now is the time to sit down with your Accountant or part-time CFO. Your Accountant will have answers to questions you may not have even thought of. The tipping point for businesses that fail is so often the epic backlog of tax and staff entitlements they weren’t paying, trying to keep the business alive. Your accountant should work with you to sort all your entitlements, leaving you headspace to run the business. You could also hire a part-time Virtual CFO to apply their expertise to your finances. It sounds counter-intuitive to spend money when you have financial issues but it could be the best thing you ever spend money on, freeing you up to focus on other areas of the business.
Related: When should an SMB hire a CFO?
Pay off debts
If you have debts, you can appoint a ‘small business restructuring practitioner’ with powers to shield you from creditors, rather than the current system that leaves you at the mercy of outside administrators or receivers.
Renegotiate lease terms
If you predict that you will be struggling to pay your rent, speak with your landlord now and renegotiate existing arrangements again, if you haven’t already.
Assess your future staffing needs
If your business has experienced change, review your staffing needs. The pool of quality talent is larger now as people have moved from in-office work to work-from-home with more hours to fill in doing other jobs. Consider diving into the pool to hire on a part-time or contract basis.
It is a sad, brutal truth but it is possible you will have to let go some of your staff. Ensure you have quality HR practices (in-house or outsourced) to handle the process correctly.
Give yourself more time to recover
The safe harbour and voluntary administration regimes are designed to give companies, and their directors, leniency from creditors and time to ‘right the ship’.
Related: Think twice before going into Voluntary Administration during Covid
Reinvent your business
Prepare for the ‘new normal, whether it’s restructuring your business, restarting with a new model, strategy or market, or revamping your marketing.
Plan for post-Covid and Covid #2
Plan for the immediate and long-term post-stimulus environment and have a contingency plan should the economy be hit by another Covid outbreak. Planning could include the evaluation of your supply chains and ensuring that future access to materials, components and finished goods will not be impacted by another catastrophe.
Related: Should you do Business Planning during Covid?
Seek help if you are struggling
If your mental health is being impacted by your financial stresses or the need to let staff go, speak with a trusted counsellors who can provide support and advice you need.
- Call Beyond Blue support line on 1300 22 4636
Beyond Blue is an Australian mental health and wellbeing support organisation. They provide information, advice and strategies to help you manage your wellbeing and mental health during this time. - Call BEING Supported – Mental Health Peer support line on 1800 151 151
A warm line service staffed by trained and experienced peer support specialists all with their own lived experience of mental health issues. - Call Brother to Brother on 1800 435 799
Brother to Brother is a 24 hour crisis line assisting Aboriginal men throughout COVID-19. The line is staffed by Aboriginal men, including elders, to promote a culturally safe service. - eFriend
eFriend is a virtual peer support service and offers befriending sessions to connect you to eFriend peers via video call or phone call. - FriendLine
FriendLine is a support line and online chat service for anyone who needs to reconnect or just wants a chat.
Have you noticed our #FridayExpertTips... here's one that relates to #Accounting
“There is no denying that COVID-19 will have short and long-term effects on the economy and your business. It’s imperative by now that you have a long view Cashflow forecast in place that deals with both good and worst case scenarios so you are ready to react swiftly. Speak to us today if you need help."
Disclaimer
This information is accurate on the day it’s published and is subject to change as the situation around Coronavirus (COVID-19) evolves. Our conclusions may not be valid if there is any change in those facts, circumstances and assumptions. Accordingly, neither Azure Group Pty Ltd nor any member or employee of Azure Group, undertakes responsibility arising in any way whatsoever to any persons in respect of this alert or any error or omissions herein, arising through negligence or otherwise howsoever caused.
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