We’re not going anywhere (literally).
The world is in the throes of uncertainty. And if there’s one thing humans do not do well with, it is having our structures turned on their heads. When our job security, our health, and our routines are thrown out the window, we invite in the seeds of doubt, panic, and territorialism that have the ability to turn our societies upside down.
COVID-19 will stand as a great reminder of what can happen when you least expect it. Yet, while many risks are difficult to anticipate, much like the GFC and natural disasters that have come before, we know that they do happen, and we find ways to move forward.
While business owners may be focusing on the downturn of the economy, there are many things you can do to combat this blip and best prepare yourself to weather the economic storm.
No business will come out of this unscathed, but CPA Australia has put together some great resources that can be used as part of a comprehensive risk management strategy, to ensure business owners are equipped to handle the potential fallout of COVID-19. We've included them in this article along with some practical tips.
To start here's a quick tip from our CEO, Simon Bedard on how you can take action now:
Understand the Current Status of Your Business during COVID-19
From having an up-to-date financial overview, to understanding the potential impacts COVID-19 will have on your supply chain, customer base, as well as staff roster, will work towards helping paint a clear picture of how significant a blow your business could shoulder. List these possible pain points out so you can devise strategies or ‘Plan B’s’ in order to mitigate issues wherever possible.
Assess, Refine, and React to Fluid Financial Situations
Having a strong working knowledge of the health of your business is key in creating an action plan that will help you navigate through the current crisis. This can be done by taking a step back, analysing your statements and running them through financial ratios. You can use the CPA’s Small Business Disaster Recovery Toolkit to get you started.
#1 Access the Small Business Disaster Recovery Toolkit
The next step is to revisit your budget, as any projections you had for Q2 and beyond are most likely going to need to be adjusted. Work with your CFO or your accountant and cross-reference your impact list in order to see how impacts will affect your cash flow and where you can possibly modify your budget preemptively. The best way to prepare for a decreased cash flow is to ready a cash flow forecast which can be updated regularly throughout the crisis as it develops. This will give savvy business owners the ability to act fast and stave off any additional concerns.
Adapt to a Digital Economy
With government bodies around the world beginning to enforce safe social distancing, most businesses are relying heavily on their e-commerce stores as people choose to stay inside and shop online. If you do not have an e-store, or way of delivering your service through online means, now is a great time to set one up. If you do, it’s important to make sure you speak to your suppliers early so there’s a plan in place to ensure there’s no break in the supply chain.
This also means looking at your operations and seeing what can be done to minimise human-to-human interaction. If there’s the ability to work from home, all non-essential employees should be empowered to do so. As we potentially reach different stages of the pandemic plan, we recommend enforcing everyone take their laptops or other critical business tools home at night in case the office has to shut at short notice.
Begin to create your contingency plan with this checklist.
#2 Access the COVID-19 Contingency Plan Checklist
Check-In Often on Your Business
This is a fluid situation, and as such, things will change quickly and sporadically. As an owner, it’s your responsibility to constantly be measuring your business, and figuring out how well you’re performing against your key indicators. This reflection could be used to also plan ahead, not just in the intermediate crisis, but how you would like to run your business going forward, what your business goals are, and where you see yourself going.
Consult an Adviser to Understand Your Options
There’s never a better time to understand what exit options you have available to you and how you can best prepare for them. Knowing when to act and what you need to prepare for beforehand, will most certainly set you apart in the market.
We have a variety of ways we can assist. We help you tackle the 3 big things - valuation, timeline, and legacy
What is your valuation today? What is your ideal valuation? What’s the gap?
What’s your personal timeline for exiting (it’s OK if you are not sure about this yet) but whenever you exit a business there are various steps that you must implement that take time.
We’ll help explain this to you so that you can factor it into any potential plan.
What happens to the business after you leave? And what happens to all those important relationships with employees, suppliers, and partnerships. There are things here you may not have considered in the past, and we’ll help you get clear on them.
Thinking about Selling Your Business?
If you are thinking you may want to sell your business in the next couple of years, there are critical steps you should take now to maximise the value of your company.
If you would like to know more about this, reply to this email and we can arrange a confidential chat to explain this process in more detail, as well as provide you with tools that can assist.
Our current climate is one that paints an uncertain picture for business owners over the next few months. But tapping into resources like the CPA's guide shows that there are proactive measures business owners can take in order to build immunity against COVID-19 and the toll it is taking on the economy.
Download the resource to learn more about the steps you can be taking to protect yourself, your employees and your business.
#3 Create your COVID-19 Contingency Plan with this detailed planner
CEO and Founder, Exit Advisory Group
If you would prefer to reach our directly, I would love to start a conversation. Connect with me and send me a message on Linkedin, or get in touch any of the ways below. Old fashion phone calls are also welcomed!
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