The Coronavirus pandemic has proven to be a challenging time for many businesses. By working with businesses directly affected by COVID-19, this has re-enforced some critical factors for managing business downturn.
1.Cashflow is Key
Monitoring and preserving cashflow is critical. Some strategies to consider are:
– Speak to your suppliers. Keep communication with suppliers open and regular. Don’t be afraid to ask for extended trading terms and payment plans.
– Contact the ATO for payment deferrals and re-negotiate payment plans.
– Contact lenders to defer loan payments and interest.
– Get in touch with your landlord to negotiate rent reductions, deferrals and waivers.
– Don’t wait too long to review and quantify deferred payments. Keep a close eye on accumulating debt and work out a repayment plan sooner rather than later.
2.Keep Accounting Records Up To Date
– Accounting records should be kept up to date to monitor business performance and determine if new strategies are working.
– Contact your bookkeeper for accounting support. If you do not engage a bookkeeper on a regular basis, look for a short term or on-call bookkeeper to assist you with processing financial information on a timely basis.
– A bookkeeper can also assist with advising on cloud accounting software suitable for your business and automate your processes.
– Engaging an on-call virtual Chief Financial Officer (ie, “on-call CFO”) can provide you with expert business advice.
3.Business Strategy and Organisational Review
– Review your current strategies, processes and business plan.
– Consider strategy changes to realign with current business climate such as marketing, change to product offerings, production and delivery methods, review employee roles and numbers.
– For new strategies and ideas, run a scenario analysis to determine how this will impact the business and its various stakeholders.
– Be prepared to instigate and monitor change.
4.Prepare Cash Flow Forecasts and Profit Budgets
Preparing cash flow forecasts and profit budgets will help you:
– Understand how much cash is available to run your business.
– Plan for debt repayment (eg. suppliers, bank/lending, ATO repayments).
– Create “Growth Goals”. Preparing a realistic profit forecast will allow you to understand the level of growth you can achieve and how long it will take to get there.
– Understand how your business is performing and if strategies are working by comparing actual to forecast cash flow and profit results.
5.Your Mental Health and Wellbeing
Starting a business takes a lot of time and effort and in most instances, is the result of turning a passion into a journey of entrepreneurship.
To be faced with COVID19, business downturn and coming to terms with the possibility of the need to close your business (whether it be voluntary or government mandated) can be devastating and stressful.
Communicate openly and regularly with those close to you, professional medical practitioners and your trusted business adviser.
Please contact us to find out more. The team at EMspire Advisory are experienced bookkeepers, accountants and on-call CFOs in Sydney and would like to help you create, grow and succeed in business.
Please note that this information is not specific and is general in nature and cannot be relied upon as advice. Please contact us for specific advice for you and your circumstances.