Australia’s largest labor market intervention measure as a response to the COVID-19 pandemic, Jobkeeper, is coming to an end after a lifesaving 12 months.
With the end in sight, experts estimate 100,000 jobs will be lost, thousands of businesses will be placed into administration and approximately 1 million employees will still be heavily reliant on the scheme. So, preparing your business for a post-Jobkeeper economy is vital.
- Prepare for the best. Prepare for the worst.
As a business owner, do you know whether your revenue will grow, plateau or decline and what effect this will have on the business? A useful tool to assist in strategically forecasting your business performance is scenario planning, whereby you identify a range of potential trading outcomes, and their impact on your business, and prepare critical responses for both best- and worst-case scenarios. This method is an integral approach to dealing with uncertainty, mitigating risk, and managing the forces that may affect the future growth of your business
- Evaluate Your Business Model
Analyse your current business model to understand how it has been affected, along with your markets and industry, by COVID-19. From here, you can make adjustments to adapt with the changing environment to ensure you are not out-performed by your competitors. As an example, the move to online delivery of education, health and fitness has led to the survival of many business.
- Forecast, forecast & forecast!
‘Cash is king’ is an adage conveyed throughout the ages, and this is no different. A thorough review and analysis of your cash management is vital for a business to remain viable as it is not uncommon for a business to close its doors due to a small financial hiccup. Accounting for all incoming and future outgoing cash will assist your business to identify any cash flow issues that may arise. Early identification will allow the business to adjust and plan around matters such as raising finance, reducing debtor terms, tightening debtor collection processes, negotiating longer payment terms with suppliers, improving efficiencies, and more.
- Cut back on unnecessary spending
Cash flow forecasts will highlight unnecessary costs negatively affecting your cash flow and a preventative measure is to continuously review ways to reduce unnecessary cash outflows. Starting with the major operating costs, this could include:
- Re-negotiating supplier contracts;
- Reviewing the efficiency of your staff and/or the utilisation of the business’ direct materials
- Reviewing your HR policies and staffing requirements;
- Reviewing how efficiently the business utilizes its premises and whether reductions can be made;
- Comparing the market for better prices; and
- Reduce or cease spending on items no longer required such as old obsolete software subscriptions.
- Build stronger relationships
You don’t know what people are willing to do for you if you don’t ask. Building a stronger relationship with suppliers could be mutually beneficial in terms of longer payment terms, discount rates for early payments, or discounts for loyalty or minimum spend which will assist in your businesses cash flow management. On the other hand, strong relationships with customers or clients can invite referrals and new business to increase revenue. Never underestimate the value of a strong strategic relationship.
- Help is available – You don’t have to do it alone
Attempting to minimise the negative impact on your business once Jobkeeper comes to an end will come down to receiving the right advice. Seeking professional financial help in preparing accurate and reliable forecasts and discussing the viability of your businesses future is beneficial to your peace of mind and the business’ survival. The end of Jobkeeper, should not cause sleepless nights, or mean the end of your business.
As always, we are here to assist you. Please contact us to explore how we can support you and your business and map out a plan together.
Your trusted advisors at Archangel Wealth.
