Business Strategies for COVID-19

If you haven’t realised it yet COVID-19 is here and it’s aftermath will not evaporate overnight, do don’t just stick your head in the sand, now is the time to do something!

The financial impact of COVID-19 are wide ranging and immediate.  This pandemic exposes the vulnerabilities not just to public health, but to the world financial markets and will be wide ranging as well as long term.

It has never been more crucial for business owners to have a plan on how they are going to deal with this current situation.  This is not just some airy fairy idea in your head – it should be a written plan that takes into account the core strengths of the business so that these are not overlooked when you are implementing some short term measures.

Some things to consider :

  • What are the potential issues for your business – staff exposure, exports to and imports from impacted countries, are you in the hospitality industry, does your business rely heavily on tourists, what steps have you put in place to protect your workers and your customers whilst in your business workplace?
  • Do you have a business loan – take the opportunity to discuss options on deferral of loan payments now.  Don’t forget to also look at home loans and personal loans as well, which are likely to also be impacted by cash flow.
  • Credit Cards – open up the discussion around deferring repayments
  • Rent – talk to your landlord about whether the opportunity exists to negotiate a reduction in rent or defer rent payments.  Landlords after all would be happier to have some money coming in from tenants that none at all.
  • Suppliers – what is the impact on you receiving products for resale from your suppliers – do they/you source from overseas – have they been impacted and what is the flow on effect for you.  Can you ask for revised payment terms and discount rates.  What are the foreign currency implications for your business – do you have options in place for hedging further foreign currency movements?
  • Debtors – it is even more important to manage your debtors. This is not just about what is currently on your books, but looking at future work you do.  You may look at instigation of deposits, prepayments or direct debit options. You need to keep the cash coming in!
  • ATO – ensure you continue to lodge on time, but if necessary do negotiate with the ATO regarding the deferral of the payments or implement a payment plan
  • Protect yourself – not only do you need to protect your physical well-being and health, but also yourself as the business owner/director need to ensure that your business structure minimises your personal liability and that of your shareholders.  If you are unsure about the level of protection you have in place, open up a discussion with your accountant to investigate further
  • Cash flow planning – whilst deferring payments will assist in the short term, the long term effect is that debt will be dragged out further and so you need to look at your cash flow both in the short and long term.  This should help identify periods of time where it may become evident that funding may be required to weather the storm.

Whilst this list is not exhaustive, it is a starting point, and it’s important to realise that you may not be able to do this all on your own – so reach out for help where needed.

We are all in this together.

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