Survival tips for small businesses

As the economy takes the early steps to adapting to a new normal, we look at what steps you could implement to minimise the impact of COVID-19 on your business.

Small businesses owners must do all that they can to ensure their business models survive and thrive in the post-coronavirus economy.

Federal and state government help, along with six-month loan deferrals will help, but there are other decisions which can be made today which will help ensure businesses can survive once the stimulus packages end in September.

Cash is king

Cashflow management is critical for businesses, particularly during a crisis and is one of the most important things for a business to be focusing on right now.

Most businesses will have some working capital available, but this can quickly be used in challenging times. Use your knowledge of your numbers and understanding of future income, orders, costs, commitments, etc. to look at how you and your business can cope with a fall in income. Ask your accountant to help if you need support doing this. Consider how you might respond. Do you need to control costs? Is there a need for further funding?

Know your numbers

Understanding how your business is performing is critical in difficult times. You are likely to have to make important decisions to help support the business and this needs to be based on an accurate view on where the business is and where it’s going.

Make sure your accounting records are up to date and work with your accountant. Now may be a good time to update your systems and take advantage of some of the tools and technology available to help you understand the numbers and save time and effort.

Once your figures are up to date you can more accurately predict demands on your future cashflow, make more informed decisions and get a clear picture of what your business and, more importantly, you and your family may need over the next few months. 

Think about funding available

Your bank is probably your first point of contact as they will know you and your business - many of the major banks have stated they have options that businesses are able to access should they experience temporary setbacks as a result of COVID-19 affecting their business.

You should also consider alternative lenders who may be able to help you in the short term.

Stay in touch with your customers

In any crisis, clients, whether large or small, look for reassurance. We are all facing similar challenges so you can easily relate to their issues. A quick email, or even better, a phone call to see how your customers are managing may make a big difference to them, show that you truly care and generate goodwill that will be valuable in the future. Most will be comforted that there is someone who understands what they are going through.

Staying in touch also helps you understand the challenges your clients may be facing in their own businesses, which in turn helps you consider the likely impact on your own current and future revenue. The more time you have to look at this impact and react, the better.

And a final point on customers – yes, you do want to keep working with them, but if there are outstanding amounts due to you then start chasing for payment now to help support your own cashflow.

Speak to your suppliers and landlord

It is important to open dialogue as soon as possible where it is likely payments to creditors could be missed. Talk to them about possible rent reductions or payment plans. To get your suppliers and landlord onside, engage proactively and treat them like the important stakeholders that they have been, are now, and will continue to be.

Review your staffing arrangements

Many businesses will inevitably look at ways they can reduce staff costs and will be considering redundancies, reduced working hours, unpaid leave, etc. Communicate clearly with staff. Be open and honest with them about income falling and your need to protect your business and develop clear policies to manage layoffs if you are forced to make them. Brainstorming ideas with staff about working arrangements and how things can be done differently will help make them feel more involved.

It is important to consider what your business needs to function, even at a reduced level of activity. It’s also worth bearing in mind the costs and challenges of recruiting further down the track when you are trying to return to ‘business as usual’.

For many, cost control will be inevitable and staff costs will be a key part of this. Flexible working arrangements such as unpaid leave and reduced hours are now commonplace. If you do decide to take this action to protect your business make sure you consider employment law and seek advice should you need it.

Look at your insurance cover

Check your insurance policy to see if your commercial insurance includes Business Interruption, Supply Chain or Denial of Access cover. This may include cover in the event of your business being affected by a ‘notifiable disease’.

If you do feel you have some form of cover, speak to your insurance provider or broker and ask them how this would work in your particular circumstances.

Analyse all costs

Are there costs that you can quickly eliminate? Subscriptions, software, insurance policies, switching to a more competitive energy provider to lower energy bills? These are quick ways to help your cashflow.

Take a fresh look at your company post-COVID-19

Do you need to adapt to changing consumer behaviour? Have you set up cashless trading? Have you set up social distancing and hygiene measures? Ensure you make the most of social media. Think about getting your message out there about your company in the most effective way. Look at content marketing, positive new stories, video messaging etc

Speak to our team

There are several ways in which we may be able to help. It’s always important to get good advice and that’s particularly true in turbulent times. If you need help please talk to us on 1300 448 303 or use our online enquiry form. We can offer initial consultations, advice and support over the phone if you have any concerns about face-to-face meetings.

And please feel free to share this information with your customers to help them plan their business affairs during these challenging times.

Date published 2 Jun 2020 | Last updated 2 Jun 2020

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.