““The challenges in this situation are complex. There is uncertainty that surrounds the business environment, the stock market has gone up and down like a yo-yo but there are also challenges in the way the government has been working” Laming says.
“Whether you’re a large, small or medium-sized business, this is really impacting everyone. In the SME space particularly they feel the pain a lot quicker because the pure cash reserves aren’t necessarily there so the key is to plan as best you can and have some contingency plans in place.”
Laming says revisiting your business plan to adjust priorities and forecasts; maximising your use of the outside help on offer; the clever adoption of technology; and, doing your very best to look after staff are keys to surviving the downturn.
“It’s not an easy thing to navigate through and it’s something we’ve never seen before in terms of shutdowns and isolation – it’s just unprecedented times,” he says.
Be proactive about revisiting your short term and long-term plans
Businesses need to immediately alter their business plans to ensure their fixed and variable costs can be reduced to meet dwindling revenues.
Simply recalculating the level of sales or revenue needed to cover the fixed and variable costs of the business can give you an indication of your current break-even point. Then by scaling back the variable costs as much as possible can give you a new baseline to work through the short and long-term needs of the business.
Laming says now is also a time to challenge suppliers about some of the fixed costs such as negotiating rent relief with landlords.
“Look at the cashflow and profit forecasting and put together some scenarios around that – best case and worst case and the impacts they would have on your financial outlook from a profit and cashflow projection to determine where there might be some challenges.
“It’s important to really understand the KPIs of the business and what is driving revenue. Be proactive about where things are going and the steps you put in place. If you monitor your financial performance and you’ve got some plans around the stages of that financial performance then you can react a lot better.
“The businesses that run from one month to the next with a focus of having some money in the bank, they’re the ones who are going to feel it really quickly.
“The ones with good financial practices around budgets, cashflows and periodic reporting in place where they are managing their numbers and KPIs probably have a much better outlook and they’re the ones that are engaging early.”
Using technology as a tool to better business
Creating an IT plan now is critical. Your information systems teams will play a crucial role in facilitating remote workability and ensuring core systems have the necessary controls in place to support this style of work.
Crises also present opportunities to streamline the business and work smarter. This could include moving aspects of the business online or using downtime for system maintenance.
“Look at ways to use technology to allow you to continue to operate as a business by using things like video conferencing so you can still deliver service requirements and ensure revenue is still coming through the door,” Laming says.
However, the infiltration of the virus also brings virtual threats in the form of phishing emails and cyber-attacks on systems. Hackers in parts of the world not yet severely impacted by COVID-19 know you are in a weakened position and are very active. Emails disguised and headed by trusted sources will become prevalent.
Protecting your human assets
So much of a business’s planning success will depend on how they treat their people during this challenging time. The actions as a business now will impact people relationships indefinitely but will also provide opportunities to build trust.
However, as many small businesses shutdown – at least temporarily – as they have in other parts of the globe, there could be some difficult staffing decisions on the horizon.
“It’s about supporting your people through the tough times as well because what you want is great people within your organisation who will deliver great outcomes for the business so it’s really important to get around your people.
“The possibility of shutting stores, restaurants etc is there and the flow-on effect of that is dealing with staff. With permanent staff you’ve got to look at leave and that comes down to your war chest and how long you can operate at a bare minimum of fixed costs until you have to start trading again to get some revenue through the door.
“This is where the biggest challenge will be: if we go into lock-down, how long will that lockdown be. Getting through the next month or two is one thing but the next six months or 12 months is another matter.”
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