Small business owners need to be savvy during this extended economic shutdown. They need to take proactive steps to protect their businesses.
The Coronavirus crisis is not going to blow over any time soon. Small businesses in New Zealand need to account and plan for low customer and sales numbers, disrupted supply chains and even cash flow issues. Keep on reading to discover nine great tips on managing the risks of COVID-19 on the health of your business.
1. Know your supply chain
You have probably realised than many elements of your supply chain are located in China or other countries significantly affected by COVID-19. You need to understand your supply chain thoroughly. This will enable you to pinpoint areas that may be jammed up. From here you can troubleshoot solutions.
2. Look at alternatives
Any or all of your suppliers may not be functioning due to global economic shutdowns. You need to be pragmatic and immediately look for alternative solutions.
3.You need a contingency plan
There have been so many changes and restrictions imposed on New Zealand businesses. There’s no use complaining or risk violating government-mandated orders. You will simply need to readjust the way you do business.
Perhaps this means scaling back your production or reducing the size of your inventory.
Your customers’ spending habits may have changed. People are doing more online shopping. They are buying home improvement goods, exercise equipment, meal preparation services, entertainment goods and pet goods, just to name a few areas that are booming. Your target market may have changed entirely. You should update your marketing strategy accordingly.
Consider localising your customer base if you rely on overseas customers. Shipping routes are busier than ever and you may have more success at home.
4. Look at your cash flow budgets
There’s no use burying your head in the sand. Your cash flow has definitely been affected by this crisis, probably for the worse. You need to be realistic and assess your ability to pay your suppliers and manage your debt. You can use a cash flow calculator if you don’t have online accounting software already.
5. Review your fixed costs
Reducing fixed costs is key to long term survival for your business, operational costs can be scaled down with the rest of the business. However fixed costs like rent, utilities and insurance will continue. This is a great time to review your insurance policy, does it cover everything you and can you get a better price?
If you have Business Insurance you might be eligible to claim for Business Interruption. This will pay you for loss of income and increased costs of running your business as a result of interruption caused by events covered under your policy. You can compare quotes online instantly save money by comparing Business Insurance packages at www.bizcover.co.nz.
6. Keep your financial reports up to date
You might have more time on your hands as day to day operations slow down. This is a great incentive to keep on top of your financials. You should keep track of your profitability, stock levels, and incoming and outgoing expenses. Again, here is where online accounting software proves invaluable.
7. Be open with your stakeholders
Your customers and suppliers will appreciate your honesty. If you‘re having supply chain or production issues, let them know what is going on rather than keeping them in the dark and compromising your service without explanation.
If you’re having issues delivering your usual services, you will need to let your customers know. Nothing is worse than a late or absent delivery without an explanation.
You should talk over your scheduled payments with your suppliers and bank. In these difficult times people are more than understanding. They might even offer you a discount for an early or on time payment.
Rent is another issue facing small business owners. You can ask your landlord to make a payment plan with you. You can also talk to the IRD for help with any tax debts that you may have.
8. Train your staff
If your staff are unable to perform their usual duties you can encourage them to undergo other training. Many universities and educational institutes are offering free or subsidised online training.
9. Cut down on your overheads
Every business has discretionary expenses that can be slashed.
You can even ask your landlord and utilities providers whether they can offer you better rates.