JobKeeper and a host of other government support programs for businesses affected by the COVID-19 pandemic will inevitably come to an end. Here’s how small business owners are preparing for what comes next.
As the coronavirus pandemic forced the shutdown of large swathes of Australia – and its economy – this year, the Federal Government was quick to step in with JobKeeper and a host of other support for businesses.
Many of those programs are currently scheduled to end on 30 September 2020 (although the government has advised that the results of a review of the JobKeeper scheme will be released on 23 July 2020). Regardless of the cut-off date, the support will inevitably come to an end and canny business owners are planning ahead to make sure their businesses are ready for possible challenges that could arise.
Cash flow is more important than ever
Smart business owners are pinpointing how far their sales could drop before they start incurring a loss and running a cash flow shortfall, says Tom Walsh, Director of Walsh Accountants.
“The important thing to remember is to cut costs to the bone but not into the bone,” he says.
“You need to still have the capacity to offer your clients great service. Ask yourself what expenses or resources you need to cut and make sure you know what level of sales you need post-September to maintain your business.”
Jason Xu, Director of business advisory Boa & Co, says although businesses in some sectors are starting to trade more normally as restrictions ease, it is important to take a close look at your cash position.
“JobKeeper allows businesses to pay their staff at the moment but they need to evaluate their staffing requirements for when the assistance ceases,” he says.
“Also, some businesses will have a loan [from an approved lender such as Prospa] under the Government’s Coronavirus SME Guarantee Scheme [which offers no repayments for the first six months]. Those repayments will need to be met and calculated into your cash flow forecast.”
Xu points out that any deferred rent will need to be repaid, which must also be factored into cash flow forecasts.
Watch the post-pandemic trends
Walsh says even as some normalcy returns [in the majority of states and territories], many changes will remain.
“We can’t assume our old customers will just come back,” he says.
“Everyone has changed and people will be reconsidering all their spending habits.”
One of the major trends, Walsh says, is the move to online business. “You need to prepare for that to be a much larger proportion of your sales than ever before. For example, if you’re running a physical food business and you started offering products online during the COVID-19 shutdown, you need to keep up with the online offer.”
Walsh adds the move to hybrid workspaces is another trend that won’t go away. “Many people aren’t going to want to come into the office five days a week anymore and that means adapting. Also, if you’re a coffee shop in an office tower, for example, you should probably plan for less foot traffic.”
10 tips to thrive after government support ends
Walsh shares his 10 tips for preparing for the end of government support:
- 1. Plan for the worst – but hope for the best.
- 2. Prepare a budget and cash flow to understand what your breakeven level of sales is.
- 3. Customer supply chain habits were broken during COVID-19 and everything is up for grabs. Do you need to offer extended terms? Is it worth offering your customers a discount? Think of ways you can offer even better service.
- 4. Don’t just rely on your gut instinct. Get good data around your sales line.
- 5. Maintain a good relationship with your landlord. Talk to them if you’re having trouble meeting the rent and proactively discuss solutions.
- 6. Know your customer base and build a fence around those who can help your business regrow.
- 7. Clean up your processes to make sure they are super-efficient.
- 8. Watch what the market leader in your industry is doing and adapt.
- 9. Revisit your website and give it a score out of 10. If you give yourself a low score, you’ll need to clean it up. Even if customers aren’t purchasing through your site, they’re going there to get an impression of your business.
- 10. Good staff have always been a core pillar of business success but it’s even more important now. You need to be sure they can operate autonomously, particularly when working from home.
Worried about the ups and downs of cash flow? Talk to a Prospa small business lending specialist about how a line of credit could help minimise cash flow stress.