Sphere’s advice on how you can protect your small business from Coronavirus
During these uncertain times, Prime Minister Scott Morrison has warned Australians to prepare for a coronavirus “pandemic” as the government implements its emergency response plan.
To that end, small businesses also need to have a plan to deal with the fallout from the virus which includes a drop in customer and sales numbers, disruption to supply chains and, ultimately, cash flow shortages.
So, with that mind, here are some tips to manage the risks of the virus to your business:
Develop a contingency plan
Have a plan to deal with disruptions to the supply of your products and services.
You may need to scale back production for some parts and stock.
Rethink your marketing strategy and how you can change customer behaviour until the crisis passes. For example, re-assure your customer base that you are taking all the necessary precautions to minimise the risk of spreading the virus.
You need to know in advance what impact a slowdown will have on cash flow.
For example, review and adjust your cash flow forecasts to determine what affect a reduction in sales will have on your ability to pay suppliers and repay debt
Timely financial reporting
Ensure that your financials are kept up to date so that you monitor profitability, stock levels, debtors and creditors balances on a timely basis.
Communicate with all key stakeholders
Timely and honest communication with your customers and suppliers is important. Customers need to be made aware of any issues with the delivery of your products and services and what contingency plans you have in place.
Re-negotiate payment terms with suppliers if necessary and talk to your bank if you are unable to meet your loan commitments.
Review your debtors and, if necessary, offer discounts for early payment. You could look to seek extensions from your landlord if unable to pay the rent on time, as well as consider entering into payment plans with the ATO for BAS and tax debts.
In case of prolonged staff absences, cross-train your key staff so that your business can continue to function at all times.
Look at all the costs of your business and reduce discretionary and non-essential expenses.
Fixed costs such as wages, rent, utilities, financing costs and tax liabilities are not affected by a decline in sales and need to be properly managed.
Seek professional advice today
It’s very important for small businesses already impacted, or likely to be impacted by the coronavirus to seek timely professional advice – don’t sit back and hope this will all go away soon. Contact us at the office (03) 8899 6399