As the lock down measures are wound back and we are now considering life after COVID19 in Australia, the question is, how do we recover?
It appears accepted that some businesses simply won't re-open. That position probably reflects businesses that were already struggling, or a business has now become marginal or terminal in the wake of the market dislocation created by the COVID19 crisis.
By the time the Australia-wide lock down ceases, the bulk of the country would have spent several months within the confines of their own house. We know that there will be significant debts that need repayment and a recession, that has already been foreshadowed, to navigate through. It is likely that the real financial pain is yet to come.
Detailed below is a starting point that all businesses big or small should consider.
- What's happened to your business since COVID19?
- Have spending habits changed in relation to your product or service?
- Is there still a business for your goods or services?
- How do we tell clients we are up and running/still here?
- What resources are available to you:
- Stock - can you get favorable terms?
- What other deals are there to be done with suppliers, landlords, financiers, etc?
- Do you need short term working capital (do you need to engage with your financier)?
- Are the buyers for your product the same as pre COVID19?
- What is your credit risk profile going to look like? Will you give clients 30, 60, 90 days to pay?
- Set some performance benchmarks for 15, 30, 60, 90 days.
- Prepare a cash flow forecast.
Ideally, we would like to see Job Keeper kept going for at least 30 days post lock down, this will ease the burden of transition and in reality, the Commonwealth and State undertakings designed to keep the economy alive will need to be amended to get it growing again.
Just as "all bets were off" when this process started, the same attitude may be needed to make for a smooth, seamless transition, rather than an abrupt shock to the system where you either survive or don't.
The next period of time is an important stage of business evolution, your desire and financial ability to implement change is going to be your biggest hurdle.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.