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Managing the Impact of Coronavirus on Your Business

By March 19, 2020 No Comments

 Coronavirus (COVID-19) is a respiratory illness in humans and animals caused by a new virus. Symptoms range from a mild cough to pneumonia. Some people will recover easily, others may get very sick. This could bring significant challenges to you, your family and your business.

In mid-February around 1-in-6 Australian businesses (15%) had already been affected by the coronavirus. This new threat to business comes after over a quarter of Australian businesses (28%) said they had been affected by the expensive bushfires over the last few months according to a special Roy Morgan Snap SMS Survey of 1,170 Australian businesses.

 

The Australian government has announced the following stimulus for businesses:

Cash flow assistance 

The government has announced a cash payment for employers of up to $25,000 with a minimum payment of $2,000 for eligible small and medium-sized businesses.For businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020 the payment will be tax free.Businesses will receive payments of 50 per cent of their Business Activity statements or Instalment Activity statement from 28 April with refunds to then be paid within 14 days. 

Instant asset write off

The instant asset write off threshold has been increased from $30,000 to $150,000 and expanded access to include businesses with annual turnover of less than $500 million until 30 June 2020.

Investment incentive

Businesses with a turnover of less than $500 million will be able to deduct an additional 50 per cent of the asset cost in the year of purchase. This is a time limited 15 month investment incentive through to 30 June 2021. 

NSW Payroll tax waiver

The NSW government has also announced the waiver of payroll tax for businesses with payrolls of up to $10 million for three months, the rest of 2019-20.

This means these businesses will save a quarter of their annual payroll tax bill in 2019-20. The payroll tax threshold will also be raised to $1 million in 2020-21.

MANAGING YOUR BUSINESS THROUGH THE CORONAVIRUS CRISIS

Every business should establish a crisis response structure with established workflows, clear responsibilities and accountabilities. Then develop likely and reasonable worst-case scenarios and their potential impact on the business. If you are worried about the impact COVID-19 will have on your business then it’s time to future proof your business.

These are the most important things to protect your business against any future downturn: 

1.     Set up your response to COVID-19

  • protect your people and plan your workforce
  • maintain business continuity and protect your supply chain
  • provide clarity to employees and enable business continuity
  • gain insight and assess your exposure to risk
  • balance customer care with commercial priorities
  • join up efforts on a cross functional basis to ensure business continuity and resilience

2.     Ensure 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

3.     Update your cashflow forecast for the next 12 months

  • identify any future cashflow issues and put in place the right strategies

  • identify when you may need future finances

schedule any major capital expenditure

4.     Reduce your debtors and inventory levels. Ensure suppliers are focused on retaining your business

  • set up an automated follow up process through your accounting software
  • allow multiple payment options including credit cards
  • ensure your debtor days and supplier days are in sync
  • source alternative supplier prices and terms of trade or payment arrangements

sell the things you don’t use, can’t use or can’t sell

5.     Overhead costs should be reviewed and reduced where possible

  • costs like rent, leases, administrative staff, receptions, accounts etc should be examined
  • ensure you are using the latest accounting software and its automated functions
  • remain flexible and ready to scale your business activities up or down

6.     Narrow your business and service offering and continue to add value, not increasing price

  • focus your efforts on extracting the most margin and providing the best offering to your customers
  • look for ways to add value rather than increasing prices
  • seek referrals from existing customers and repeat business by adding value

7.     Secure your current customers, then take advantage of your competitor’s customers

  • market to your current customers by offering perks and special discounts
  • take advantage of your competitors who haven’t planned for a downturn

8.     Never stop marketing, promoting and selling your business and its products

  • set yourself apart from other business by offering a superior product or service
  • ensure you are offering outstanding customer servicedo not stop sales or marketing activities
  • look for more cost effective alternatives such as blogs, articles, emails and newsletters

“I’m convinced that about half of what separates successful entrepreneurs from the non-successful ones is pure perseverance”
– Steve Jobs

TURNAROUND MANAGEMENT

Turnaround management is a process that uses analysis and planning to identify and rectify declining market performance. Our highly trained and experienced business advisors, examine your problems objectively, isolates the key areas of concern and implement a solution to return your business to its former glory.

WE CAN WORK WITH YOU TO TACKLE THE CHALLENGES YOU FACE IN RESPONDING TO COVID-19.

If you have any questions we’d be more than happy to have a chat and answer them for you. We will discuss the current state of your business, your objectives and how to achieve these goals. But most importantly we can work together to future proof your business.

To set up a meeting, get in touch today!

E: info@williamadvisorygroup.com P: (02) 9660 7061

Jake Elliott

About Jake Elliott

Jake Elliott is a Chartered Accountant with extensive experience offering Outsourced CFO and other consulting services to businesses. His background working "in-business" allows him to provide clients with insights into their operational and financial performance beyond the capabilities of their accountant/bookkeepers.

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