The COVID-19 outbreak is impacting businesses in Australia in many ways including reduced trade, temporary business closures, staffing issues and supply chain interruptions. However, with the Government working to get business back working and looking to lift restrictions, now is the time that you need to start preparing to reopen your business in the ‘new normal’.
To help you get ready, we have prepared a list of things you need to start doing to get your business ready to thrive post COVID-19! Steps you should be taking to get your business ready to go back to work:
Your need to prepare a plan for what you will need to do to get back to work. It will be helpful to simulate potential scenarios and how you and your employees can respond to each scenario.
If not already doing so, you should consider options for:
- selling products and services online;
- look at different ways to deliver your service or product to customers;
- think about and plan for things like the need for increased cleaning of surfaces;
- keep up to date with current social distancing rules and how they will be managed in the business; and
- consider how you will keep your customers, clients and visitors safe.
Businesses should prepare new budgets as previous budgets will no longer be relevant due to the crisis. While there may still be market fluctuations, businesses should ensure they have what they need when they need it for various scenarios. Ensure that the business can make payroll, maintain inventory and respond to market demand.
Many finance companies are looking for businesses to provide forecasts when assessing new loan applications.
Scenario analysis, where you compare different future forecasts and how your business will respond to each scenario, is now more crucial than ever. A good way to start this, is to prepare a budget based on last year’s figures compared to a budget with a 30% drop in revenue. Then consider implications of State and Federal government subsidies, cashflow support and drill down into your expenses, line by line, to identify areas you can cuts costs.
It’s critical that a business’s financial information is updated at least weekly. This will identify any cashflow issues and enable the business to identify any financing needs. Reliable financials will result in informed business.
- Ensure your financial information is up to date, accurate and understandable
- if you need to access finance, your records must be on point
- make informed business decisions based on reliable financials
- financials should be available within 7 days of the end of each month
- the following KPI’s should be readily accessible: sales, debtors & creditors, cashflow, debtor days
After re-doing budgets it’s time to update the business cashflow forecast for the next 12 months. Identify any future cashflow issues and when you may need future finance. Also update the cashflow forecast when you resume business, weekly. This will forewarn you of any cash flow problems and you can act accordingly.
Improve your cashflow by:
- Talk to your debtors, confirm payment dates;
- Be open and understanding, if your debtors are hurting too, ask for smaller more regular payments;
- Review debtors weekly, what is outstanding, how much, when did you last talk to the debtor and when is payment expected;
- Consider offering discounts for upfront payments or for clients who pay before the due date;
- Discount and sell any idle stock, if you are carrying inventory that is not moving, its time to make it move;
- Reduce stock levels, free up any cash caught up in stock;
- Talk to your creditors, ask for extended payment terms or discounts for paying on time;
- Negotiate instalment plans with the ATO;
- Cut any unnecessary spending, delay large purchases and reduce staffing costs where possible; and
- Negotiate rent waivers and deferrals with your landlord.
- Narrow your offering and add value, not price
Diversifying your offering can be costly. Even if it’s successful, it still costs money. Instead of veering away from your core business activities, steer into them!
Focus all your efforts on extracting the most margin and providing the best offering to your customers. Look at ways to add additional value, rather than try to increase prices.
Continuously adding value to your business and service offering is the way to get repeat customers and get new referrals. Push the price too high and you’ll be asking your customers to shop around for a better deal.
- Never stop marketing and selling
Regardless of what happens, never stop marketing, promoting and selling your business and its products. A contracted market gives you an opportunity to really set yourself apart from other businesses by emphasising your superior product, service, efficiencies and outstanding customer service.
Do not be tempted to cut or eliminate sales or marketing activities. Use your money wisely, if you can’t afford a full-on marketing campaign, try alternative ways to promote your business. Blogs, articles, emails and newsletters are not only cost effective, but can really help you turn a downturn into an opportunity!
We want to help you thrive through these uncertain times and come out a stronger, more profitable business.
If you have any questions, we’d be more than happy to have a chat and answer them for you.
In May 2020, we are offering a FREE business health check for your business.
The FREE business health check will:
- Identify the areas above that are most critical for your business;
- Discuss the current state of your business, your objectives and suggest a roadmap to achieve these goals; and
- help you get your business back up and running profitably, as soon as possible!
Let’s get started, contact us now!
E: firstname.lastname@example.org P: (02) 9660 7061