Crises – Survival Guide

Dealing with Crises

As an advisor to small and medium sized businesses the last few weeks have been monumental as I’m sure most will appreciate. Crises occur at intermittent intervals and affect businesses to varying degrees, but the Covid-19 crisis has hit the entire population and hence every business. Having said that there are still variances in the hurt caused to individual businesses.

Many of the questions I get asked are unanswerable. How long will this last? By how much will my sales decrease? Will things go back to normal when this is over? These are just a sample of what I get asked. Understandably business owners are confused, worried and downright scared. Taking a step back from the situation you realise that all the worry about what might happen is very unproductive, these are events they have no control over. What they need to do is focus on what they can control. Prepare their business as best they can for the tsunami and ride the wave out when it arrives.

So, my survival guide for any business faced with a crisis that will affect multiple facets of the business are these…

Key Objectives for the Period of the Crisis

If a steep decline in sales is anticipated the following are things that need to be considered:

1. Conserve Cash
   1. Focus on keeping debtors up to date.
   2. Eliminate unnecessary spending.
   3. Review staffing levels.
   4. Eliminate waste.
2. Staff
   1. Review leave owing to each staff member.
   2. Rank staff in order of who you definitely don’t want to lose to those who wouldn’t hurt the business at all.
   3. Look at reduced hours with either leave or unpaid time off.
   4. Apply for Government subsidies once the eligibility criteria are published.
3. Creditors
   1. Negotiate terms with creditors to either stretch out payments or get a discount for payment.
   2. Negotiate with bank/financiers for payment deferrals on existing debt.
   3. Negotiate with landlord for rent assistance during the period.
4. Decide which creditors must be paid – those that would stop the business if they withdrew supply.
5. Prepare a cash flow forecast for the next six months to determine the extent of any cash deficit.
6. Seek to take advantage of the low interest unsecured government guaranteed loans available through the bank – up to $250k which acts like a line of credit. If you don’t use it, you don’t pay.

Follow these guidelines and I can’t guarantee survival, but I can say that you will be way ahead of where you would have been if you did nothing.

Keep Your Eyes Open

My previous blog spoke to the opportunities that abound during a time of calamity. That still stands. Keep your eyes open for any opportunities that arise for your business and take advantage of them. The current crisis will pass but I’m not making any predictions about what things may look like on the other side. I’m no Nostradamus. All you can do as a hard working SME owner is prepare as best you can and make solid decisions based on the scenarios that present themselves. Do your planning, conserve your cash and hold on for the ride. It’s sure to be a bumpy one…

If you would like some help developing your survive and thrive plan please give us a call +61 417 277 233 or contact us here

You can find more information on the current Government subsidies here

Other Articles