Like me do you think it’s been a strange week?
A week ago our country was talking about limiting contact in an effort to restrict the spread of the virus, and now our focus is getting back to normal, whatever that may look like. And we have an App to help us! I can’t comment on why this change in the debate has occurred and why it happened so quickly so we await the outcomes of future Government advice on whether we return to our office or continue working remotely. But it set me thinking about things that a business owner can be doing in the expectation that restrictions will be eased in the coming weeks. And as I write I’m very aware that within our client base we have people for whom the virus has been extremely difficult (and who have lost their incomes) and others for whom the virus has had little effect on their activities. So this article is trying to cover all these different bases for readers.
This week I want to write about my thoughts on what you can be thinking about for you and your business now.
Do you have a shed with some old tools or kit stored in it? In my shed I have an old lawn mower that my Dad bought when I was in short pants and which has passed through to me. It’s a piece of equipment that has followed my family around as we have moved house and has become a butt of jokes about me and lawnmowing! It’s a petrol powered engine that I haven’t used for over ten years. And if I went to start it up I know that I wouldn’t expect it to start first time, and it’s going to need a lot of love to coax it back into life.
And getting our business world up and running again is a bit like my mower: it will take time and needs care and attention.
It seems to me that businesses have two things to consider:
- When do I reopen and how?; and
- What sort of a business will I have when I reopen?
A bit on definition: in this email “Business” refers to any enterprise including our many charity and not for profit clients.
So firstly “when do I reopen and how?”
This is particularly relevant for businesses that had to shut down and those that are working remotely.
Some businesses will have this decision taken out of their hands, because the Government will tell them to reopen. A good example of this is our public and private schools, and our hospitals and people working in elective surgery.
For those businesses who have a choice in the decision here are a few of my things to consider. Please do not take the following as professional advice, they are simply ideas for your consideration in no order of importance.
- Do I need to open my workspace to service my clients/customers? If there is no need to have a “shopfront” open, then it may be safer on your staff to continue working remotely to restrict the risk of spreading the virus and minimise the costs of cleaning your work space. Clearly if face to face service is integral to your business how do I deliver this while abiding by the social distancing requirements. There is some great information that is tailored to industry on the Safe Work Australia website which you can access at: https://www.safeworkaustralia.gov.au/covid-19-information-workplaces
- Do you have a duty of care to clients and employees. For your employees how are they coping without work, or on reduced hours or working from home. Are they coping in this time or will restarting your business help in keeping the team together and working well. Are staff missing the routine of the coffee catch up and for those with small children the opportunity for some adult chat time? From our own experience I know that providing some flexibility pays big dividends in future loyalty and commitment.
- Does a reopening mean all employees are back in the physical space, or can I do this by splitting my employees into teams. If I’m working in teams what effect does that have on cleaning for the workspace and on the efficient delivery of the service. Is a teams approach an efficient way of working for my business.
- Do I work with sensitive information and will working in our physical space give a more secure environment for that data?
- If we reopen, does that send a message to current and prospective customers that we are “open for business” or could it be perceived as a negative message.
- Is it more efficient or productive to work inside my office than remotely.
- What communications do I need to let my customer base know what is happening.
And secondly ”what sort of a business will I have when I reopen”
This is possibly a harder issue to work with. Clearly if your business ceased to trade then the world has changed for you. If your business went remoting then the change may be a lesser effect, and for those that continued as if nothing happened, then you too will need to prepare for a change in our economic circumstances that almost certainly will affect you.
An economy builds a head of steam that enables it to keep generating business. The effect of COVID -19 is a bit like trying to change direction in a cruise ship. The forward momentum keeps the ship moving in a straight line before the instruction to change direction has an effect. Many businesses we are talking with are still in that forward momentum phase from work generated in the first few months of this year. The effect of the virus may not be felt by these businesses until mid-year or later as the Government stimulus packages delay the financial impact of this slowdown.
In my view it is unrealistic to expect that reopening your physical doors will be business as usual. A few thoughts for you to consider, again not in any priority:
- Is this an opportunity to re-imagine the business. If you were starting the business now, with all your experience to date, what would your business look like? It’s the clean sheet of paper approach that may help position you to get through the coming months of economic recovery.
- If your business has customers outside WA, what effect does the reopening of their economic locations have on me, here in WA? Other Australian States will have different experiences to us here in WA.
- Remember the old saying when we are at election time ‘it’s the economy, stupid!”. Avoid the threat of being sucked into thinking that when this over there will be a “new nirvana” we will be living in. Before the virus, the annual growth in Gross State Product (non mining) for WA was consistently < 1% pa. This is less than inflation and the real cost of doing business. Simply coming out of this enforced shut down doesn’t mean that our businesses will be saved.
- Thinking strategically: can you reposition your business to take advantage of the virus.
- And always remember that cash is king. Calculate your cash flow projection after taking into account any Government assistance you receive and how deep a pocket you have to keep trading if turnover declines. A few additional thoughts on this matter:
- The Government cash stimulus ends at the end of September. What happens after that? Are the Government payments creating a false floor to the economy through which some of your customers will crash?
- Since Christmas 2019 the ATO hasn’t been chasing outstanding debts from small business. We know that many businesses are undercapitalised and rely on unpaid ATO debts to stay afloat. What will happen if the ATO start looking to collect outstanding amounts again? After all the stimulus is going to have to be paid back somehow. And this impact is not so much about your business, but the customers and suppliers you work with. Consider whether you change your business conditions to ask for money in advance of commencing a job as a way of protecting your position.
- Are you also going to “kick the can” down the road. Changes to the Corporations Act to extend the period for a statutory notice of demand from 21 days to 6 months may result in a delayed response to a slowdown in the economy.
- Will banks have the capacity to lend money for ongoing activities or expansion after September. We are starting to hear of limitations in the availability of credit in the banking sector.
- The success of a growing economy is confidence. My point 3 above alludes to a lack of confidence in WA before the outbreak of the virus. What will trigger a change in confidence for investors to buy assets. Every investor wants to buy at the lowest price and many investors will be sitting and waiting for a low point to be reached before they start investing in assets again. This isn’t limited to the share market, it also applies to the value of businesses, housing and equipment. Until there is return to confidence and some increased certainty about the future economic prospects for our State and country it’s unlikely that investment in assets will resume.
- If your business closed down due to the virus, and had debt outside manageable levels, then this may present an opportunity to consider whether reopening is advisable. The concessions for debt recovery and the suspension of ATO collection activity may give a window to close down at a lower cost than if you continue to trade with the inherent uncertainty of future trading conditions.
- Is your plan capable of being revised to take account of changes in the community that are outside of your control? Do you have a Plan B, C, D….?
I appreciate that I have given a smorgasbord of issues to think about. We are available to discuss with you individually should you want to reach out to us. And as we have indicated before we have strong links with trusted advisors we have worked with for a number of years that we can introduce you to assist in:
- Rethinking your strategic plan
- Managing your cash flows
- Considering full or partial close down options
- Negotiating with your bank(s)
- Resetting your marketing approach
I trust this article is not all doom and gloom to you. I am trying to stimulate some discussion points for you and your business team to take control of the things that you can manage.