Every small business should be reviewing their operations closely to determine the likely impact of the COVID-19 pandemic. Now is the time to figure out a way to navigate the storm ahead.
This small business review should be multifaceted and include:
● Analysis around what services or products you offer – will there be continued demand for them?
● Can you diversify some, or many components, of your services or products?
● Is there an alternative way you can meet the current needs of your market and bolster your income?
● Can you alter your current operating costs or reduce overheads to create breathing room?
● Can you avoid putting off staff until absolutely necessary?
● What incentives or concessions are available from the government to support your business?
We can already see certain industries and services have been heavily impacted, but many are responding to this critical challenge as best as they possibly can (some better than others).
Think inside the box
Cafes and restaurants have had to close their doors as a result of the government imposed restrictions aimed at stemming the spread of the virus. Many of these operators have responded to this extraordinary challenge by increasing (or starting) takeaway offerings. Some have even launched a delivery service. These efforts may not provide sufficient turnover to match normal trading conditions, but they may help keep these businesses viable and actively trading through this pandemic.
It’s important to think and plan strategically in the present environment. If the course of this pandemic consumes the next several months, we will see disruption in the market. Consider a collaborative approach or a strategic alliance within your industry. If your product is in short supply, is there a company out there who can help you meet the high demand? We’ve already heard examples of this in the region, with a local West Gosford alcohol and coffee producer adapting to create hand sanitiser with their existing equipment!
Build at Home
One interesting example of adaptation during this pandemic, is its effect on the manufacturing industry. Prior to 2020, manufacturing largely dwindled in Australia, making our nation heavily reliant on import trade. With the current restrictions in place, local manufacturing capacity now has renewed importance and value. Of course, the face of manufacturing in our country hasn’t changed overnight, but the current pandemic may result in a review of how we conduct business overseas and the importance we place on growing and building in our own backyard. This could have positive, long-term implications. For now, we need to simply look at existing infrastructure and consider what capabilities can be shared around to improve the economic outlook.
The focus is very much on providing essential services to satisfy local needs.
As every industry faces unique and unprecedented changes, it’s a vital skill for survival to adapt. And quickly. We must tackle our individual challenges front on, and take lessons from other sectors we can apply to our own business.
Open your Digital Doors
Chapman & Frazer is a service-based business, so we are fortunate to still offer the majority of our regular services through technology. Daily staples to our digital office environment are now client phone calls, emails and video conferences. We are limiting the need for face to face interactions in line with social distancing restrictions. Allowing our entire team to work from home is another step we have just taken.
While our office doors are closed, we are very much open for business during this period. We have made this decision to be socially responsible and to protect our staff and their families, a choice made easier by having the ability to work remotely with little disruption.
We already invested in cloud-based software and systems prior to the outbreak. In hindsight, this was a brilliant decision that now allows our team to remain fully connected and continue delivering our services.
We are using any downtime we find to review our existing services and systems, looking for new ways to innovate and improve. This proactive approach may help how we fare through this pandemic as a business, but at a minimum it will leave us well prepared and positioned when normal market conditions return.
Check your Cash Flow
To keep your business viable during tough economic conditions, review your expenditure. The expenses you can reduce will be directly correlated with what cash reserves you have, and what revenue you can rely on through this period.
No one knows how long it will be until normal conditions resume. In this light, don’t simply review once, but adopt it as a recurring practice – unfortunately no ‘one and done’ fixes are available. The expenses you can cut, or reduce, will depend on what your business considers essential to keep trading.
Be mindful of what your upcoming and continuing expenses are. Continue to monitor the changing environment and determine whether cuts are needed in your business.
If things are looking dire, you may need to look at reducing staff hours, numbers, or discuss an interim measure. Would everyone agree to take a pay cut? This is no doubt painful. Stressful too. But if it means your people have a chance to keep their jobs rather than join the Centrelink unemployment queue – it may be a viable option.
Whatever cost-cutting action you decide is best for your business, we recommend you:
● Carefully consider all options
● Think through the impact of each
● Take advice from professionals
● Discuss things with your accountant.
Seek Business Support
Unless you’ve been giving the media a wide berth, you probably heard ScoMo’s stimulus packages are rolling out. These packages will provide support to both individuals (plus families), and businesses to help keep our economy as stable as possible.
Specifically looking at business support packages – this is definitely a topic to discuss with your accountant, as this article is no substitute for professional, personalised business advice.
The government originally announced a conservative (but still helpful) stimulus package, but then pledged a heftier economic rescue package to help businesses work through this pandemic. Ensure you’re well-informed on what support and help is available to you.
Key points from the latest stimulus rescue package for businesses include:
● Up to $100K to eligible small and medium sized businesses (aggregate turnover under $50m) and not-for-profits, with a minimum payment of $20K (received by a reduction in payment of your PAYG withholding)
● Increased instant asset write off from $30K to $150K for business with turnover under $500m (effective immediately)
● ATO deferring by up to 6 months the payment date of amounts due through BAS’s (including PAYG instalments), income tax assessments, fringe benefits tax assessments, and excise
● To support small and medium enterprises to access working capital, the government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs (the guarantee is for the lender, not the borrower, to encourage banks to lend short-term unsecured loans to businesses to help them through).
Fight the Fog
We hope our commentary gives you some encouragement and stimulates positive, creative instincts for how you can act in your situation. There are options available to help manage a business in this uncertain time, and it is not all doom and gloom.
Don’t fail to take action where needed, but if you’re considering any of the above advice, make sure you plan carefully and consult the relevant professionals. We strongly advocate for clearer, more concise communication with your staff and customers during this period. Business transparency will help to ease their uncertainty and allow them to focus on the job at hand, which will serve you both well.
If you have any queries about how we can continue to support you through this period – please feel free to reach out to us at any time.