Managing your business in a crisisPractical strategies you can deploy straight away.
We are experiencing extraordinary events, first the bushfires, then the rain and now the impact of the coronavirus.
The impact of these are likely to see Australia enter into recession for the first time in almost 30 years.
For businesses to prepare and combat the effect of a recession, business owners must urgently review their business and prepare for such an event. To assist business owners (or your clients) through these troublesome times, below are some simple and practical ideas that business owners can implement during such a crisis. We can also assist business owners with this assessment.
Here is our 5-step process to crisis proof your business.
- Identify and build
- Execute and act
- Speak to us
This is for you to focus on what is within your control and what your business key drivers are.
• Is your work environment for staff and customers safe?
• What expenses are key to the business operating and which are not?
• Are there any expenses that can be reduced without impacting the business’s long term viability?
• Which revenue streams have been or will be impacted?
• What actions can be undertaken to protect and maintain revenue?
• What obligations do you have to financial institutions, such as loans?
• What statutory obligations to you have in the short and medium term?
2. Identify and Build
Once you have determined the key drivers of your business then you MUST develop a plan.
Documenting the plan, allocating responsibilities, and setting agreed timelines is essential.
Ensure your staff and key stakeholders are supportive of the plan. Communication is key.
• Prepare a plan to ensure a safe environment for your staff and customers. How are you communicating that you have a safe environment to your staff and customers? How often are you communicating?
• Optimise revenue—what revenue initiatives can be undertaken to maintain a sustainable level of income—consider collection of debtors, sale campaign, alternative delivery methods (online). Are there new revenue lines that can be undertaken as a result of changing market conditions? But also be honest with the stock levels you have to your customers.
• Supplies – ask your suppliers if they can recommend alternatives if they’re affected by imports. If they can’t, explore finding alternative for your stock.
• Reduce expenses—a detailed review of business expenses should be undertaken to identify any expenses that can be reduced or even eliminated altogether. This could be a reduction in staffing hours, termination of unnecessary or non-essential services or even sale of surplus assets that are subject to finance.
• Deferral of expenses—are there any other expenses that can be delayed? Are there any creditors that are willing and able to provide support through relaxed payment terms? The Australian Taxation Office (ATO) can provide relief through the following initiatives:
– Deferring (by up to four months) the payment date of amounts due through the business activity statement—including pay as you go (PAYG) instalments)—income tax assessments, fringe benefits tax assessments and excise tax.
– Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to GST refunds they may be entitled to.
– Allowing businesses to vary PAYG instalment amounts to zero for the March 2020 quarter. Those businesses can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
– Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.
– Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans.
– Financier support—contact your financier to discuss what financial support is available (usually by way of deferred payment terms under the loan facility).
– Consider government assistance—find out which government support applies to your circumstances.
3. Execute and Act
Urgently responding to these situations could include the following approach.
• Increase your sales through new sales approaches and new revenue lines.
• Increase exposure through other platforms to sell and market your business. Could platforms previously thought to not work for your business now be relevant? Consider ecommerce and social media to increase your businesses visibility and exposure to current and new markets.
• Communication must be open and transparent with employees, financial institutions, landlords, suppliers, the ATO, customers and local business networks. It should be regular and honest.
• Implement relaxed payment terms. Make it easier for other businesses to do business with you. But make sure you understand the financial impact this may have on your business.
• Enable staff to work from home if possible. Staff safety is paramount and non-negotiable.However, knowing what they need to be effective while away from an office environment will help speed up this process and streamline job functions/tasks during this period. Also ensure cyber security measures are in place.
Regularly check on the financial position.
• Monitor on a regular basis.
• Adapt and change your plan, if necessary.
5. Speak to usThe current environment can be very daunting and we are available at any time to assist business owners that find themselves in a distressed position. We are experts in
providing advice and can provide the guidance that may be needed in these difficult times.