For several business owners, who are trying to remain alive amid the coronavirus pandemic, the coming months will prove challenging. Although there are a range of policy programs in place to help businesses during this difficult period, battling for survival will always be a matter of.
Businesses must be careful about their resources and be smart. Reliable Bookkeeping Services provides the following business and financial management advice to assist companies through this extraordinary occurrence. Find these next steps for a bit of advice on how to handle the next few months.
1. Ensure Employee Health and Safety
The most important thing for your business right now is your own health and that of your staff. The last thing you want or need is anyone with some illness, coronavirus aside, being struck down within your company. Take the appropriate precautions to ensure that your business practice is safe, and follow the Department of Safety health advice.
Some firms have totally modified their way of working to make consumers feel at ease. Check out for example the new ‘zero touch’ strategy for Domino’s. Few simple ways to improve health and safety, including cleaning activities, empowering workers to operate as far as possible from home, reducing customer interaction and supplying customers and staff with a hand sanitizer.
2. Strengthen Any Debts
Sometimes building a business means getting into a little (or a lot) debt. However, right now is not a great time to spread thin over multiple loans. Some companies may consider consolidating their debt to be helpful, meaning rolling it into one manageable account.
Consolidating debt will help you consolidate any outstanding debt into one that is easier to pay and more economical because you can negotiate a lower interest rate.
The first thing you can do is gather details on all of your unpaid debts and find out how much you can afford to pay every month. Speak to a financial advisor at a bank after obtaining that information to talk to you through their options. This is a especially good idea if you are in a situation where you need to take out a loan to keep your coronavirus company afloat.
3. Review your business outcomes
It is probably the last thing you want to do as a business owner, but it is important for factoring in what steps to take next to assess the damage sustained to your business. Our advice is simply to rip off the bandaid; look at your previous month’s cashflow. What does the forecast look like for the coming week or months, based on trends?
Working capital: How and why did this change? Compare this to the norm for industry. Is there a way for you to generate extra capital?
Cost base: Does your selling price cover your costs? Can you cover the cost of this base by a sudden drop in sales? Can you switch operations to lower the base cost?
Credit: Do you have credit lines or loans? Can you stay on top of those in the near future? Are there better or cheaper forms of finance that you could use?
Growth: Have you succeeded in producing some development over the past year that can be included in this time? Will you need to go downscale? Can you adapt your financing to suit and grow the changing needs of your business?
While feeling helpless and defeated during this pandemic is simple, this time too, many businesses see it as an opportunity for growth. It is a unique situation where many enterprises are forced to adapt to new customer needs. Therefore, it’s the ideal time to pause and carry out a business study and revisit and redefine your objectives. Go back to the basics of strategic analysis with the following models.
- SWOT Analysis (Strengths , Weaknesses, Chances and Threats)
- STEEPLE Analysis (Social, Technological, Economic , Environmental, Political, Legal and Ethical Considerations)
- The Five Forces (examining the factors affecting market development: potential entrants, existing competitors, purchasers, suppliers and alternative products / services)
- The Five Forces (an examination of factors influencing market development: potential entrants, existing competitors, buyers , suppliers and alternative products / services)
- OR use your model of choice. You know how to go about that. You have been at this very stage already, after all.
4. Come up with a New Plan, after analyzing business performance.
Begin by taking a look at your core activities. What made them succeed? So how can they be adjusted to fit the times while providing the essence of your company to your customers? Is there any complementary goods or services that you can offer?
Create a new strategy for how you expect to react to the factors below.
Your Premises. Have to shut down temporarily? Why do you work from your premises while upholding the standards on health and safety?
Delivery Row. Will any of the restrictions put in place affect your supply chain? How can you get your supply chain changed to keep your company going?
Communication Systems and Everything. How do you use communication channels to maintain relations with customers and stakeholders?
Your Team. Do you have the correct person in your team? How are you going to help your staff while keeping the business afloat?
Your Finances. What initiatives of government can you use to support your business? Don’t know of any initiatives by the government?
5. Consider having loans with low interest rates
Despite many of the government’s cash-flow programs being compensated after submission of BASs, or a ‘back-pay’ process, many companies are pressured into self-funding while awaiting financial assistance. So they need to quickly find support. Talk to your financial institution about loans with flexible payment options at low interest.
When you need Credit line or Term Loan financing?
A credit line operates in a similar fashion to a credit card, where you have access to funds when you need them from a lender. This can be a helpful solution when the cash flow gap needs to be filled or when urgent financial issues need to be addressed. This credit line can be kept unused, until required.
Business term loans, on the other hand, are effective in funding investments and properties with a longer period. For instance, while waiting for Government support packages to begin. Many term loans, however, are fairly inflexible and carry high early repayment penalties if the funding is no longer necessary. Shop around during this period, to find a low interest alternative.
6. Invest in an accountant, bookkeeper or software
Hiring a bookkeeper or accountant is a perfect place to provide practical and useful guidance to handle the company’s financial hand. Although bookkeepers work closely with you to manage your finances, maintain track of everything and include financial statements, accountants will help you take a better look at the larger picture: the company survival. Depending on the size of your requirements, these are important tools to your companies.
However, if you don’t have the resources or energy to spend in these team leaders, then you would choose to use current accounting software to run things yourself. We’ve discussed two of the best accounting and bookkeeping software available, Xero and Myob in previous posts. Have a brief peek at how these accounting and bookkeeping software will help you handle your financial relations.
7. Contact the stakeholders
In all of this, it’s crucial to connect with the business’ core stakeholders, whether they’re managers, owners, administrators, creditors, customers, a board of directors, or clients. Your correspondence will provide awareness of the coronavirus pandemic and show concern and consideration for the main stakeholders.
It is therefore necessary to discuss any improvements that may be made to the way the company runs. As for which platforms to use, email is your main touch point. Should not fail to connect to the greatest possible degree at main posts on your social network and website.
8. If you are a sole trader-you can access some of your Super:
It’s not an optimal solution but the only feasible choice for others. As part of the Coronavirus Economic Response Package Omnibus Bill 2020, the Australian government has allowed qualifying workers, including sole traders, to draw funds of up to $ 10,000 from their Superannuation account (within this and next financial year).
This is to alleviate financial distress arising from the adverse economic circumstances arising from the coronavirus pandemic. This money will not levy any early release fees, nor will it be taxed as taxable income. This money can provide the lifeline needed for the sole traders to keep their business afloat.
During this difficult time Reliable Bookkeeping Services works closely with small businesses to provide relevant and realistic financial advice. To see if we can assist, communicate to one of our qualified bookkeeping experts today on 1300 049 534.