Tips to help your business survive the shutdown and come out the other side.
Maintaining cash flow to keep your business viable during this unprecedented economic shutdown will be a huge struggle for many businesses. And doing so may leave little mental space or time to plan your strategy for ramping up your business when the current restrictions do ease.
That’s why we’ve put together this list of actions many business owners can take to improve their cash flow now while simultaneously preparing for the time when conditions start to improve.
Keep on top of your numbers
Compare your sales and your gross profit and loss reports for the same weekly or monthly periods in 2019 and now. Not only will these figures show you exactly how much COVID-19 has affected your business, the comparison will highlight precisely where you’re being affected the most.
With accurate numbers, you’ll be in a better position to create more accurate sales and cash flow projections for the rest of this financial and calendar year. They may also show you how your business can rebuild after restrictions end.
And if you’re claiming the Federal Government’s JobKeeper assistance package, accurate figures will be essential.
Renegotiating your leases and supplier payment terms may help reduce your overheads. Many companies understand that maintaining relationships with long-term tenants or customers will be key to all businesses returning to normal faster.
Now is the time to reach out to negotiate new terms, or even deferrals, for your premise and equipment leases as well as suitable payment terms with your suppliers. Some businesses also have sizable sums tied up in security and bank guarantee funds. Renegotiating these amounts could free up your available cash.
Keeping employees on the books will also make a return to normal business far easier. To reduce demand on cash flow, many businesses have already applied for the Federal government’s JobKeeper payments and negotiated with their employees around the use of holiday pay and introducing temporary salary reductions or reductions in hours. If you haven’t, now is the time to do so.
Remove non-essential operating costs
Go through your overheads line by line to identify anything that could be reduced or eliminated. Do you need the same amount of stock and warehousing? Do you need to maintain the same number of shifts or stay open for the same number of hours? Reducing hours could save on utility, employee and supply costs.
It’s a good time to delay any capital expenditure if you can – unless an investment would immediately reduce your operating costs or help you meet a sudden surge in demand.
Prepare for the new business as usual
No one knows the exact timeline or economic outlook for moving beyond the Coronavirus shutdown. However, noting your business’s strengths and weaknesses during the crisis can provide a template for going forward. There may be opportunities you were already thinking about but hadn’t made a priority – until now. A prime example is how quickly many businesses have switched to remote working. Others are now prioritising the diversification of their logistics and supply chains.
You may also need to decide if it is time to pivot, expand or limit your business offering. Have you been too reliant on one customer source? Do you need to upgrade your processes to become an on-demand business? How you’ve handled the crisis might point to your way forward.
While you may not be turning over huge amounts of business, it is still important to engage with your customers. Some tactics include offering discounts or priority bookings on prepaid services. Other businesses are offering free advice for coping without their service or product during these times.
Seek out all the information you can
The Federal Government’s ‘Coronavirus Australia’ app has a dedicated Business & employer information page and links to all the states’ and territories’ official information sites. You can also recommend the app to your employees as a reliable source of health and financial support.
NAB can be a great resource for planning your survival strategy. As well as providing useful links, our COVID-19 business support page explains the range of ways in which NAB is supporting its business customers, and our customer guidance page details our support for all customers.
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