It has been a challenging few weeks for us all. We are doing our best to speak to all our clients to understand the impact of coronavirus on your business. Some of the stories have brought us to tears however in all this doom and gloom it has been reassuring to speak to a number of businesses that are doing well or have had minimal disruption.
If you are in the fortunate position of seeing your business trading as normal or even better, now is not the time to be complacent and think you are 100% sheltered from the storm. If it is “business as usual” for you today, here are our tips on what you can do to sure up for the potentially rocky ride ahead.
- Cash is king
If there is one lesson, we can all take away from this coronavirus experience, then it is that ‘cash is king’. People and businesses living week to week have been immediately impacted. If your business is continuing on as normal or doing better than ever, please continue to build your cash war chest and don’t assume the good times will last. Follow up all your debtors to try and get any overdue payments in. Review your trading terms to ensure that you obtain upfront payments where possible. - Project your cash flow
You need to know in advance what impact a slowdown or potential shutdown will look like to your cash flow. We don’t know if these business shutdowns are a temporary blip, or for at least 6 months (which is what the Government keep referring to) or even longer if they drive the Australian and world economies into a recession. We suggest you do a monthly business and personal cash flow budget for at least the next 6 to 12 months. Estimate your future monthly revenue and do various scenarios e.g. 20%, 50%, 100% revenue reductions over various time periods. Review all expenses and see if you can remove any non-essential items now. Just because you have plenty of work on today, if it all dries up in 3 to 4 months, what fixed costs like staff and rent will you be saddled with? - Contact your suppliers and landlord
Let them know business is going well and you intend to meet your commitments. If you work with them now and keep the communication channels open should things change in the future, they are more likely to work with you. - Communicate with your customers and clients
Are you communicating with your customers and clients to keep them up to date with the products and services you are offering? Are you considering if your customers (current or those in the sales pipeline) are impacted by COVID-19? If your clients are concerned about their job security, it is unlikely they are going to be commit to that kitchen renovation in 6 months’ time. Are there any opportunities to update your marketing communications, such as your website and social media? A lot of businesses have stopped advertising – should you be looking to increase this to let people know you are open for business? - Tax Planning
Your tax planning analysis with your Accountant this year is VITAL! We will be able to provide you with clarification around the various government stimulus packages and your options to access these. We can also offer an independent review of your figures and anticipated results and assist you with making some tough decisions now if necessary.
