The impact the COVID-19 pandemic will have on the community and on businesses, particularly the small and medium enterprise sector is concerning. There is the potential for significant business and economic effects that will last for some time. As business owners, we must focus on implementing strategies that are most likely to boost our chances of business survival.
As a business owner, there’s one key thing you need to totally focus on now – keeping your business alive during these difficult times, staying up to date is crucial. All it takes is a few checks of the following key indicators for your businesses health.
The team at CHL have put together the following key areas that all businesses, whether large or small, should consider to increase their chances of business survival during this crisis and rebound in the period following.
Monitor your Cash – Your cash needs to be monitored as it is the single most important indicator of your businesses performance, this should be checked more daily than monthly. You must immediately start preserving and building cash and it is important to monitor both on a short-term and long-term basis. You should:
- Review Government stimulus packages to ensure you maximise these opportunities.
- Prepare a cash flow forecast for the next 12 months, month by month.
- Contact your landlord to discuss a reduction in your lease.
- Contact your bank to discuss your options for interest & principal repayment and short-term lending facilities.
- Protection – review your asset protection to ensure the equity in your personal home and other assets are protected. Wills and Powers of Attorney may also need reviewing.
Financial Information – arrange additional bank funding if possible. Having this in place early is the key. It is also important to reach out to your current lender to discuss possible payment deferral arrangements. It is essential that accurate reports are prepared on a regular basis so you are able to react to real-time changes in the market. Xero and other financial software can help with these reports - print and review them monthly.
Budgeting – the difference between a dream and a goal is having a sound budgeting plan. Have both long and short term budgets and review your monthly results against those budgets.
Customers – keep up to date with your customers via social apps and other platforms, and ask them what they think and want from the products or services that you are providing them. Depending on the Government Alert Levels, let them know if it is “business as usual”.
Employees – openly discuss the strategies in place for the business to survive and what this means for their employment. Find a process for collecting great ideas from your employees. Ensure that policies are updated in line with these strategies.
Suppliers – keep them updated. Having strong relationships with your suppliers is vital as they will often be willing to extend payment terms or give discounts and allowances. Constant communication is key.
Controlling Stock - Measure stock that is key to your business on a monthly basis to obtain accurate financial reports. This does not necessarily mean monthly physical stock takes but it does mean having a programme or process to monitor levels, ageing and shrinkage. Rolling stock takes and spot checks are useful. Often when money runs out, stock is the culprit along with debtors.
Strong Business Relationships – having strong business relationships are a fundamental in a successful business. Huge benefits can flow to your business that can support through tight cash flow periods.
Mental Health and Energy – look after yourself! This may be one of the most stressful times a business owner and employee may ever experience. If you feel stuck or confused about any of the challenges we are facing please make sure you seek professional help.
Information – there is far too much of it that can get you confused! Do not get flooded, get updates only at controlled intervals and make sure it is from a reliable source. Refer to our website for the latest up-to-date information from Inland Revenue and the Government.
We have also extended our Employee Assistance Program (EAP) to our clients and their family by providing the first three (3) counselling sessions free to our clients.
The Cleland Hancox team are here to help businesses through these uncertain times. If you require business advisory assistance, we can work together with you to put together a logical and practical plan for overcoming adversity.
We are providing a one-off complimentary $100 credit for COVID-19 assistance.
Article adapted from a post by Shaun Reeves of srj Walker Wayland, and used with permission.