A Guide to Resetting Your Small Business
REBUILDING AFTER COVID-19
It's time to hit reset
COVID-19 has effected us all, so let's chat about how your small business is primed for new opportunities - and use this as a chance reset...
The impact of COVID-19 and the outlook for small business varies greatly by location and industry. This is a great opportunity for all small business owners to take a big step back, breathe, review and renew with more resilience and strength than ever before.
After reading countless articles on what post COVID-19 recovery looks like, I noticed not one discussed making changes, reviewing goals or the mindset of the business owner. The articles focused on ways to get you back to how you were before. Is this what you want?
Let's start with a reality check. This is an opportunity to reflect on your business, how it was being operated and how you would like it to look post COVID-19.
Ask yourself the following questions:
- 1.Were you happy running your business before the crisis?
- 2.Were you making the profit you wanted?
- 3.Was there adequate cash-flow in the business prior to the crisis?
- 4.Are you prepared for the potential extra demands that recovering your business will place on you both personally and financially?
- 5.Can you foresee any possible emerging opportunities for your business following the crisis?
Motivated to start fresh and develop some great new business habits?
No matter your business, we'll help you grow.
Your reset check-list
Why not use this as an opportunity to review your business plan and practices, and set yourself up for the future...
Keep your records up to date
Your accounts should be all up to date, as this was needed to receive the various stimulus packages and grants and loans on offer.
To be able to make the best possible decisions on a day to day basis in business, you need current information at your fingertips. We highly recommend you use this opportunity to ensure that your accounts are completed on the most regular basis you can manage.
Let us be completely honest - the quarterly ledger book or spreadsheet just does not cut it anymore. Accounting software is affordable and easy to use.
Not sure where to start? We can definitely help with this, feel free to contact us if you like - simply CLICK HERE.
Review Impacts and Strategies
Start by making a list of the impacts COVID-19 has had on your business. Attempt to
quantify these impacts and identify possible strategies to mitigate them.
For example:
IMPACT – Sales has decreased by 40% as we have no online presence costing the business $25,000 per month since March 2020.
STRATEGY – develop a 3-month plan to engage a professional and invest in updating our website to enable online sales. Discuss with our awesome accountants how to integrate online sales with Xero!
Update your Business Plan & Budget
I am not new to this rodeo and know that right now, most of you are looking at your feet - what business plan and budget!?! Take this crisis as the perfect opportunity to update or create a shiny new business plan and budget. You will need to build in some assumptions based on the review of the impact COVID-19 has had and will continue to have on your business.
Build the impacts from the previous step into the budget as they will have an impact on your cash flow. For example, if one of your impacts was a main supplier being unable to supply a key item for six weeks, this would impact your 3-6 month budget for the sales from this item.
Identify employees with critical skills
For those businesses in the service industries, now is the time to update your organisational chart and move a few things around. Review your employees, their job descriptions, tasks, and skill sets.
Develop a short and long-term plan for those employees you are retaining. It can be difficult, but you must put on your business owner hat and do what is best for your business, not your individual employees. Always seek professional advice before changing staff contracts, hours or terminating.
Take action to improve cash flow
Cash flow is one of the single-most important agenda items when it comes to your small business...
The first step to improving cash flow is to prepare a forecast and update that forecast regularly. This will give you a forewarning of upcoming problems. There are a lot of different factors that impact cash flow and some of the tips that may be relevant post COVID-19 would not be advised in a normal trading situation.
Stock Management
- Take steps to move stock quickly
- Reduce stock orders
- Promote selling of excess, slow moving or obsolete stock
Debtors Management
- Review debtors regularly and maintain communication
- Negotiate payment terms and arrangements
- Invoice as soon as the product or services is delivered
Creditors Management
- Seek payment extensions and negotiate payment arrangements
- Review suppliers
- Get quotes from local businesses to mitigate lead times
Spending
- Cut spending on non-essential items
- Delay capital expenditure
- Review staffing arrangements
- Reduce personal wages/drawings
Finance
- Speak to your lender re filling in cash shortfalls short term
- Review current lending and discuss rate reductions and terms
Change Business Model
- Look at different ways to deliver your product or service to customers
Asset Management
- Sell or lease out assets you do not need.
Seek advice early
Regularly ask yourself:
- 1.Can I pay my creditors, tax obligations, employment obligations and make loan repayments as they become due?
- 2.Do I have adequate reserves to cover debts due and payable in the next few months?
If you answer NO to either of these questions, you should seek professional advice as these situations can snowball very quickly. There is nothing to be embarrassed or ashamed about – there is no judgement - just support and advice.
Future proof
Once the dust has settled try not to fall back into bad habits. Regularly review and update business strategic plans and budgets. Keep those books up to date.
Regularly review staffing levels and productivity. And most importantly, have a disaster recovery plan in place for next time. We can assist with this plan if you are not sure where to start.
You're all set to reset
Now you have all the information you need, it's time to get going on resetting your business...
COVID-19 has been a difficult time, and will certainly continue to affect us all in years to come. There are plenty of opportunities for you and your business in this new environment, so long as you are willing to be flexible; activate new ideas quickly; strategise to protect yourself against financial instability; and most of all, continue to support local businesses.
Speaking of supporting local businesses, if you feel you need help with anything - we are just a phone call or email away. We pride ourselves on truly being there for our clients every step of the way - which is needed now more than ever. So please don't hesitate to reach out to us.
We look forward to chatting with you soon.
Call us on (07) 3491 3458 or send us an email at [email protected]
Let's set your business to: grow
Did you feel supported by your accounting professional during COVID-19? It was a challenging time for accountants, implementing new legislation which was continually changing and evolving daily.
At Nurture, we are proud of not only the delivery of the Stimulus packages but the high level of client support provided, the provision of ongoing current information for the community and our teams ability to work remotely with no disruption to our services. When the dust settles, evaluate the services you use and ensure that they add value to you and your business.
Lisa Hooton
Director, Nurture Accounting
