Small business response to COVID-19 – we’re all in this together

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March 2, 2020
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March 25, 2020

Small business response to COVID-19 – we’re all in this together

Whatever our response to COVID-19, everyone’s primary concern should be the welfare of themselves, their families, their employees and the wider community.

As we know we’re all in this together.

Perhaps the community’s reaction to the virus exceeds the actual risk but perception is reality and the reality is that we all need to manage the virus’ impacts on both our business and ourselves.

The degree of impact on Australian businesses is unknown and business owners should remain “fluid” in their approach to business activities moving forward.  Now is a time to:

 

Lead from the front

The current situation is causing significant anxiety within the community. Strong leadership is needed.

A forward plan and strategy will produce the best result in mitigating the Coronavirus impact on your business.  Business owners should clearly communicate that the current position is temporary and discuss their forward plan with employees and other vested parties.

Also engage in dialogue with valued employees to come to a collective position that is worked through on an ongoing basis. Valued employees may provide alternative solutions not previously considered by business owners or management.

If anything, over-communicate with your employees. They will be concerned for themselves, their families and their continuing livelihood. And consider your business contingency for if schools close and your employees need to be at home to look after children.

 

Communicate

Open for business

If your business intends to remain open, send a strong message to all vested parties that you are open for business.

I recommend your business create a “Press Release” to reaffirm the value of your brand.

Example:

Strategic Accountants and Business Advisors acknowledge the impending impact of the Coronavirus. Despite this unprecedented event we are open for business. As an organization we will continue to be fully supportive of our team, our clients, the wider business network and the community. We extend our offering to provide professional support to any business or any individual we can assist during this challenging time.

Send your press release to your entire contact list not just customers or clients.

Remember, to stay in contact with key customers, suppliers and all vested parties. Maintaining relationships through regular contact is a strategic imperative.

Temporarily closed for business

If you expect that you will be temporarily closed then pro-actively communicate that message by press release.

Example:

Strategic Accountants and Business Advisors acknowledge the impending impact of the Coronavirus. In the best interests of our employees, our customers, the wider business fraternity and the community we have decided to suspend our business operations temporarily. This is not a decision that we have taken lightly but think it the best course of action during these difficult times.  We apologise for any inconvenience. Please remain safe and we will remain provide regular updates as to our business activities.

Remember, to stay in contact with key customers, suppliers and all vested parties. Maintaining relationships through regular contact is a strategic imperative.

 

Assess your staffing requirements

Assess the necessity for maintaining all your employees at 100% capacity.

Does the impending environment provide an opportunity to identify and reduce excess staff?

What is the strategy for employees to work reduced hours?

What will be the strategy for offering access to annual and long service leave?

 

Assess your workplace

Working on site

Assess and create a safe work place.

Please communicate to your employees to use a common sense approach to their health and personal hygiene as well as your expectations as to whether they will be required at your workplace.

Working remote

Assess the capability of your staff to work remotely and how this will affect communication, productivity, performance and all other personal KPI’s.

What are the hardware and software requirements for remote access?

What external resources (IT consultants etc) will need to be contacted to implement remote access?

Should you consider Zoom or Skype for remote communications and conferencing?

Invest in anti-virus software for remote locations and devices.

 

Communicate with suppliers

Engage in proactive dialogue with key suppliers to ascertain their supply chain position moving forward and determine how this will impact on your business operations.

Should alternative supplier arrangements be considered and enquiries and arrangements made?

Should the business over order key materials ASAP so as to have a working fall-back position?

Can you enter into extended payment terms with suppliers?

 

Communicate with customers and clients

With economic conditions slowing down a number of businesses will be under significant cash flow pressure. Remain diligent in the collection of outstanding debtors ASAP.

Contact Key customers/clients to assess their wellbeing and assess their likely business activities moving forward. Is it business as usual or are they expecting significant interruption?

Can you provide interim discounts to customers to encourage early payment and positive cash flow?

Will you provide extended terms to clients who may be struggling?

 

 

Manage your cash flow

There is an increased likelihood that the Coroanvirus will have a negative cash flow impact on business. This will require businesses to self-fund or seek increased borrowings from financial institutions either as a temporary or short term measure. It is likely that major financial institutions will be flooded with applications and will not be able to approve most applications on a timely basis.

On this basis it is strongly recommended that you seek pre approval for future borrowing facilities even if it proves that they are not required:

The information required by the banks to assess your request will be, at a minimum:

  • Interim 2020 financial statements
  • Historical financial accounts
  • Historical tax returns
  • Confirmation super, taxes and other payments are up to date
  • A forward projected cash flow with a detailed list of assumptions

These are all standard requests but lending criteria have tightened significantly since the Banking Royal Commission and turnaround time is noticeably longer for approvals.

I also suspect that financial institutions may wish to site a documented Coronavirus contingency plan.

Identify your future discretionary and non-discretionary spending but note that future discretionary spending should be put on hold temporarily.

Look for cost savings within your business like never before!

For businesses paying quarterly PAYG instalments you may consider reviewing your quarterly PAYG instalment amount for the quarter ended 31st March, 2020

Make a time to meet with your business advisor to deal with these actions proactively.

 

Maximize business activities in the event of any down time

Businesses generally don’t find the time to invest in back end activities as they are too busy servicing clients/customers and managing staff.

This may be the ideal time to review back end, administrative, quality assurance and other systems and procedures that get overlooked in general business.

I recommend that business owners prepare a list of activities that need to be attended to and use potential down time as an opportunity to get business functions up to speed.

 

Review your marketing strategy

It’s also a great time to review your marketing strategy. People will be looking for reassurance. Those businesses that build or have a trusted product or service will have the opportunity to attract more people.

If you don’t have a social media strategy, now is the time. With people being asked to self-isolate, they will stay connected through social media. Social media gives you the opportunity to control your story and to reach directly the people you need to speak with.

And don’t forget other marketing channels. Now is not the time to stop promoting your business while you focus on other things.

If you need help reviewing or creating a marketing strategy that is right for you, give us a call.

 

Find the opportunity in adversity

There is a real expectation that business opportunities are going to present themselves in these uncertain times. This should not be seen as a negative pursuit, business opportunities do not always have to be at the detriment of others. Good PR may be generated by businesses that identify opportunities that also project and deliver a strong community spirit.

There will also be some cash flow relief to business from the Government’s stimulus package. With the increase in the immediate asset write off cap, decisions can be deferred until June 2020 just prior to the end of financial year when businesses will be in a better position to assess funding, the acquisition value to business and potential tax saving.

Some businesses will fold and be for sale at bargain basement prices. This process usually occurs quickly and the cashed and organized will reap the benefits. Yet another reason for business to have financial accounts up to date and finance pre approvals in place.

Some businesses are cashed up. Is it the right time to get back into the market? A question for you to discuss with your investment/financial advisor!

recommend you review what you do and the way you do it. Has there been movement in your market? Are you ahead of the game or just in the pack? Are you adopting best practice? Are you embracing technology to the highest level? Are you happy? Are your people happy?

A really good time for a reset. Opportunity in Adversity

Summary:

I hope that the information provided has been useful to you and should you or any of your friends, colleague or associates have any questions or queries then please do not hesitate to call me on 9896 5100 or 0407 328 758

 

Kind Regards

Mark Wilson | Principal Accountant

Strategic Accountants & Business Advisors