SMALL BUSINESS SURVIVAL GUIDE TO COVID-19
“Feel it, it’s here” is catchphrase that we used here in South Africa back in 2010 when the FIFA World Cup was hosted in the country. The same phrase could be applied for Covid-19, we cannot deny it anymore, it’s here and we are feeling it. We have all been encouraged to wash our hands regularly and to self-isolate, the government has put in stringent measures to curb the number of infections. We have seen the dire effects across the world and we are already feeling the economic pinch.
At this point, we have no idea how the spread of the virus will play out, but we are all hopeful that we will survive this. Many big corporates have disaster recovery plans that they are now activating. Smaller businesses, on the other hand, are too busy trying to make a living to have thought about impactful disaster recovery plans. Unfortunately, the financial impact of the outbreak will be most felt by small businesses and now more than ever we need to adopt certain measures.
Below is a summary of recommended actions that could be taken:
1. Adopt social distancing
Most companies have asked their employees to work from home and fortunately, technology allows for this. If your staff can work remotely, then this should be first price. You can use technology such as zoom/skype to have meetings online. Where you need staff to be at your workplace, then make sure that you sanitize, wash hands regularly and maintain as little social contact as possible.
2. Maintain contact with your accountant
Your accountant is your trusted advisor and will ease your anxiety. Call them for guidance. If you are unsure how to budget for month-end, you have cashflow issues or you are worried about the financial outlook, speak to a person who understands your business just as much as you. Schedule an online meeting and discuss your business. Accountants are best placed to offer you advice.
3. Consider your cashflow
Assess your cash flow and plan for worst-case scenarios. Imagine that the guys who owe you money will not likely pay you and consider what would this mean for your business. A business should keep at least three months worth of reserves in the bank. Its good financial planning and should be applied consistently. If you have not been doing so, now is the time to consider this going forward. As a business, you need to be setting aside between 5-10% for future emergencies that you can tap into in times such as this.
4. Avoid any capital expenditure
This is no time to be spending money on large capital purchases. That van or property you were hoping to invest in can wait. However, if you are confident in your cash reserves, then this could be an opportunity to find a good deal as prices are more favourable now. Speak to your accountant before rushing to make that purchase.
5. Avoid late payments
Yes, times are tough but don’t ruin your credit record. If you are struggling to make payments, rather communicate with your suppliers for flexible payment terms. They are more likely to be sympathetic. Re-negotiate where you can, but keep in mind that everyone is feeling the pinch.
6. Assess available financial assistance
Keep abreast of all private sector and government communication relating to available relief programmes. The government is aware of the strains that the virus has caused on the economy especially on small businesses, it is more likely than not that announcements on reliefs will be following. Speak to your bank and find out what financial assistance they could offer you as well.
7. Review your business costs
This is the time to relook at all expenditure in your business to identify all non-esential spending. Those travel costs and entertainment could be reduced further. Also, have a look at your payment terms, some expenses can be paid monthly instead of annually.
8. Review your insurance policies
Keyman insurance anyone? Yes now is the time to consider that if you do not already have one. It is also time to re-look at your medical aid covers and ensure that they cover all health risks adequately.
9. Keep open communication with your staff
Everyone is anxious at this point, including your staff. It’s important to keep open and continuous communication. When making a decision that will affect their wages or salaries let them know in advance. Most importantly remember to reward them accordingly when things look better again.
10. Look ahead
We all know that this too shall pass. When it passes, its important for you as a business owner to reflect on your business and consider what this crisis changes for you, what you have learned and how you will do things differently going forward.
Nothing lasts forever, we live in hope that better days are coming where we will not be dealing with this virus, for now, we will do what we can to survive.
If you need to speak to a trusted advisor, please contact us here. We are here to help you.
