10 Practical Tips for Business Survival

Author: Tony Rule, Partner, TAG Financial Services

In times of crisis, it is important for leaders to stand tall and lead. There is no doubt that the current Coronavirus pandemic and the resulting impact on the Australian and International economies are serious matters. As a business owner, now is the time for you to lead your business decisively and with purpose. This will give your business the best possible chance of survival.

The top 10 tips for surviving the Coronavirus financial disruption are:

1 | Cash
Determine how much cash you have available today. This may include your fighting fund, loan redraw facilities, personal funds and other cash amounts. Cash (more than ever) is king.

Ensure you understand the impact on sales receipts, supplier payments, and overheads such as rent. At this point, we recommend this be calculated and estimated on a weekly basis for the coming months. If you are not already in this habit, and need assistance to put processes in place, please contact TAG Financial Services.

2 | Income & Expenditure
What is your income looking like? How reliable is it? Is it based around one large client, or many small ones? How will your industry be impacted?

What is your expenditure looking like for the next six months? What is discretionary? What can be turned off now?

3 | Manage staffing needs
If your business is suffering a dramatic reduction in staffing requirements, limit your use of casual staff and the hours of part-time staff, and implement your full-time staff across the business as necessary. Keep in mind that you will likely need these staff again once the crisis is over. Most people will be supportive of a reduction in hours of work to support the business and preserve their position. Keep in mind your obligations – Fair Work Australia has some guidance here.

Consider how your staff are managing the crisis. Managing relationships with your staff is one of the most critical elements of any business in the best of times, let alone now. With many people under pressure in the community with family and other needs, ensure the mental health of your staff is being considered and supported.

4 | Look ahead
How long would your cash reserve last if only 50% of invoices were collected? How long would it last if there was no income?

5 | What can you change? Start now!

a) Rent – negotiate with your landlord – or failing that does your lease have “force majeure” clause?
b) Wages – is it time to stand-down idle employees or will there need to be some redundancies?
c) Suppliers – communicate with suppliers about extended payment terms – we need to work together to get through this.
d) Customers – how will you be working together in the future? What will need to change?

6 | What assistance is available?

a) Deferral of Activity Statement and other ATO liabilities of up to 6 months.
b) Payroll tax refunds (wages under $3m).
c) Refund of PAYG Instalments from earlier quarters.
d) Apply for the $250k unsecured working capital loan
e) Refer to Summary of Announcements for Businesses: COVID-19 blog for the major initiatives at the time of writing.

7 | What if my business is locked down?

Ensure you are technically able to operate with a lock down. You should have the mindset of when not if. Consider:

a) What tasks can be done at home?
b) Which team members do you need at the moment?
c) Is this break an opportunity to re-design the business model?

8 | Is it time to wind up the business?
Sometimes an early call is better than a late call.

9 | Seek good advice
Get good advice from the appropriate advisors to help you get through this.

10 | Remember
Set aside your emotions, clarify your purpose, communicate your steps and then implement your actions.

If you have any questions, please contact us on 03 9886 0800 or via email.

 

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).