We are all operating with an increased level of uncertainty and unpredictability. As a result of COVID-19 there wouldn’t be too many businesses that haven’t felt the impact.
If your business has slowed down are you still viable? As a business owner you need to know your numbers and whether you are trading profitability or at least above your breakeven point.
If the answer is Yes, then you should be looking at the various COVID-19 support measures from the government and banks, as well as options to reduce costs. You also need to ask yourself if you can afford the cash outflow and drain on your accumulated wealth.
We suggest you consider the following when making the decision:
- Prepare and continually update a weekly (or even daily) cash outflow
At a minimum look at what your cash outflow requirements are over the next 6 to 12 months and review this on a weekly basis. Cut unnecessary spending immediately. Monitor your bank account and any other cash reserves daily.
- Talk with your landlord and suppliers
Try to negotiate better terms and be proactive in managing your debts. Ask for a rent reduction or rent freeze. If you don’t ask the answer is always ‘No’.
- Contact your bank
All the banks are coming out and saying they will do a holiday repayment for a minimum of 6 months. This will not be treated as hardship and will not affect the on-going impact with the current lender. The most important thing to do is contact the bank prior to being late for any payments. Any arrears could hinder the process and outcome.
- Manage your workforce
Clear communication with you staff is critical. Share details of the actual and possible future impacts of COVID-19 on your business. Employees for whom you don’t have enough work could be encouraged to take leave or accept reduced hours. Due to the complexity of employment law we don’t advise in this area, however if you look at the Fair Work website it is been regularly updated as the situation develops.
- Government support
Your business may be eligible for government incentives and concessions. We have a fact sheet on this. Please visit our MJJ facebook page to grab a copy.
Now is the time to start making the tough decisions, if you haven’t already. If you were struggling before this pandemic now is not the time to take on more debt. Be honest with yourself. Its going to be tough on the other side. The government is talking about this going on for another 6 months at least – is your busy really viable to trade through this? The decision to close sooner rather than later and walk away can potentially save a lot of physical and mental health issues.