We are in interesting times that we may personally not have experienced previously, but as a Country we have been tested many times and survived. These current challenges will no doubt put added pressure not only on yourself but also in the way you operate your business.
For businesses to prepare and combat the effects of such an event, we have listed below some actions you can take now:
- Look at ways to shift your sales strategy to online. This could include social media, email or promote on your web page.
- In tough times it is important to know your margin of safety and break-even point (BEP). This allows you to calculate how much loss in revenue you can have before you start making a loss.
- Develop a budget where you look at worst case scenarios.
- Understand what $$ you need to bank per day to keep your doors open. Set a clear daily target.
- Don’t lose focus of looking after your customers. Look at ways that you can assist your customers: this may include cross selling or up selling that will save your customers money and time in the immediate future. Don’t assume that your customer can’t afford to spend – they know their financial position better than you.
- Be positive – you are a role model for your team and customers.
- Understand your expense drivers. Cut any expenses that are not vital. In good times we tend to let fat/waste can accumulate in a business.
- Go to your landlord. Ask for rental reduction for 6 months. An empty premises is no good for a landlord. (The Government is looking at rental assistance as well).
- Look after your gross margin – its all about the price. Be consistent with your strategy. Don’t discount for the sake of discounting. Don’t be afraid to introduce no-bells and whistle products rather than reducing the price of your premium products. Negotiate better purchasing terms with your suppliers.
- Profit is more important than revenue in the tough times, truth be known in any time, good or bad.
- A rolling cash flow projection is crucial. Remember cash flow is king. Review your inventory levels, monitor very closely your accounts receivable and be frugal with your expenditure.
- Focus on your core business. Don’t be afraid to get rid of the products, processes, divisions, subsidiaries, plants and other assets that are clearly not part of your core business. Focus on those things that you can do well, are known for and can grow.
- Be aware that in difficult times the risk of fraud and theft increase, make sure that you minimise the risk of this.
- Are you able to take advantage of the government stimulus package? Below is a link to fact sheets that may assist.
- Employers cash flow support
- Loan deferrals from Banks
- Refunds of PAYG instalments or nil for the next 2 quarters
- Refund of payroll tax paid this year
- Wage subsidy of 50% for apprentices and trainees
- FACT SHEET
These are a few things that you can do to assist your business. Stay healthy and safe.