Tips to assist small business manage through Covid-19 situation

There are a range of actions you should consider implementing to manage your business through the COVID-19 pandemic to ensure its survival and place it in the best possible position to take advantage of the recovery. Fundamental to managing through the crisis is to keep up to date with official information on COVID-19 and any directions public health authorities may issue. It is therefore important to follow the website of your local health authority.

What can you do?

If the controls on the movement of people and restrictions on business operations goes beyond six months, businesses should review their longer-term viability. Your review should cover internal and external considerations and create strategies to overcome the obstacles.

Tip:

Seek extensions toy our payment terms with your suppliers or pay in smaller instalments or even cancel orders if necessary,

Here’s the list of actions you can undertake:

1. Update your financials and keep them up-to-date

2. Do a financial health check on your business regularly

3. Act now to improve cash flow

4. Develop a contingency plan

5. Keep in regular contact with staff

6. Increase online sales and keep in contact with your key customers

7. Keep contact with your key suppliers

8. Reality check

If you are in financial difficulty, seek professional advice early

During the crisis, regularly ask:

• is your business able to pay your creditors, your tax obligations, employment obligations and make loan repayments as they become due?

• do you have adequate financial reserves to cover debts due and payable in the next few months?

If the answers are no to those questions, you should immediately seek professional advice, as your business may be insolvent.

If your small business is in financial distress, be very wary of anyone cold-calling you, promising financial salvation. Such people may advise you to deliberately liquidate your company to avoid paying debts and continue your business through a new company. This is called illegal phoenix activity and in Australia directors found to have undertaken such activity may face large fines and up to five years imprisonment.

If you are approached by anyone cold calling you offering such advice, speak to your accountant or lawyer. Find a CPA if you don’t have a professional accountant you can turn to for advice.