TIPS FOR BUSINESSES
We have created a Business SME Action Checklist for the essential actions you should undertake for your business through the COVID-19 Health Crisis.
With more businesses being affected, it is vital that you act quickly and decisively here. Your leadership and decision-making during this period of economic instability will be crucial to ensuring your business is well positioned to survive.
- ESTABLISH A REMOTE WORK OPTION
- Work from home.
- Email, Zoom, Skype.
- Shift sales strategy online.
- Sell on Social Media, use videos to reach new leads, use an email list.
“In Wuhan, the cosmetics company Lin Qingxuan closed 40% of its stores — but the brand’s 100+ beauty advisors took to digital platforms like WeChat to engage customers virtually and increase online sales. “As a result, its sales in Wuhan achieved 200% growth compared to the prior year’s sales,” writes Harvard Business Review.
- REDUCE MEETINGS AND TRAVEL
- Postpone team meetings and hold them virtually.
- Skip business travel. If workers get sick because of travel or meetings you could have liability issue.
- GIVE EMPLOYEES FLEXIBILITY
- Many parents may need to stay home with their children due to school closures.
- Plan now for absences.
- COMMUNICATE TRANSPARENCY WITH CUSTOMERS
- Customers can empathise with brands facing a crisis, as long as you communicate with them properly.
- Describe the steps you’re taking to mitigate risk and give them insight into the steps you’re taking to help the community.
- HAVE UP TO DATE FINANCIAL STATEMENTS
- To be able to make the best possible decisions in a difficult environment such as COVID-19, you need to access to the most up-to-date information on the state of your business finances. Therefore, we recommend you bring your financial statements up to date and keep them up to date. This will allow you to make intelligent business decisions.
- ESTIMATE THE FINANCIAL IMPACT AND DEVELOP MITIGATION STRATEGIES
- Discuss with your staff, key suppliers and key customers what the likely impact of COVID-19 will be on your business. The impacts on business will likely be most significant in the following area:
- Sales – particularly if you have little to no online presence.
- Staff availability – with people likely to be subject to restrictions on their movement, their ability to work will be curtailed, particularly if there is limited scope for them to work from home.
- Supply chain – particularly if you rely on suppliers from badly impacted parts of the world.
- Finance – particularly if your cash reserves are low. If you business is already impacted, start by listing what those impacts are. If your are not impacted yet, you should still be able to make some informed projections. In listing those possible impacts, attempt to quantify what those impacts will have on your business and identify possible strategies to mitigate those impacts.
- DEVELOP A CRISIS BUDGET WITH WORST CASE SCENARIO ASSUMPTIONS
- Know your Cash Burn Rate. Understand what you need to invoice/bank per day to keep your doors open. Set a clear daily target in this regard.
- The assumptions you may have used to produce your budget are most likely no longer relevant because of the crisis, working with your Client Manager at Vision Consulting Group, take the list of possible impacts of COVID-19 you have developed and re-do your budgets. Include a range of possibilities previously unthinkable scenarios, such as a 50 to 80 percent decline in sales over three to six months or a supplier being unable to supply you a key item for six weeks. Carefully consider how each of those scenarios impacts your cash flow. It’s very important to list out your employee’s leave balances.
Should your crisis budget show that you may not be able to afford to pay employee entitlements over the next 3-6 months?
- Fair work has advised being transparent with your employee’s if you are concerned you may not be able to pay 100% of your employee’s Entitlements during the time of the next 3 months, we recommend budgeting a % of the payment that will be affordable, then proceed to discuss the employee’s individual circumstance making a deal with them and then committing to (in writing) that they will be paid a catch up when business proceeds as usual.
RESTAURANT, CAFE AND TAKE AWAY OWNERS
PROFIT TIP: HOW TO NAVIGATE IN TODAY’S UNCHARTED TERRITORY
We have put together some information for those doing it tough in the restaurant, café and take-away businesses. You may be an owner of one or know someone that can use this information. So please share!
Vision Consulting Tips on How to Navigate In Today’s Uncharted Territory
Suddenly, when you need it most, the compass is nowhere to be found and there are no charts to guide you. Still, you can survive this virus-infected sea storm if you can maintain an even keel and find ways to be of even greater service to your employees, your customers, and your community. Here are some suggestions…
Put On Your Own Life Vest First: You can’t think straight or help anyone else if you panic. Do whatever it takes to calm yourself. Recall other seemingly disastrous situations you’ve faced (9/11, the crash of 2008, the competition that opened across the street, etc.) and notice you’re still here. A sense of confidence dramatically improves the odds you WILL be successful at meeting this challenge.
(We can’t control the wind, but we can adjust our sails.)
Take Care of Your Crew and They’ll Take Care of You: Your crew is not only your employees but your customers, your suppliers and your community too. If they all know you care, they’ll care about you.
HOW THE GOVERNMENT IS HELPING BUSINESSES
The government has introduced two stimulus packages:
1. $25,000 BACK TO BUSINESSES, WITH A MINIMUM PAYMENT OF $2,000 FOR ELIGIBLE BUSINESSES.
- Small and medium business entities with aggregated annual turnover under $50 million and that employ workers will be eligible. Eligibility will generally be based on prior year turnover.
- The payment will be delivered by the ATO as a credit in the activity statement system from 28 April 2020 when eligible businesses lodge upcoming activity statements.
- Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 50% of the amount withheld, up to a maximum payment of $25,000.
- Eligible businesses that pay salary and wages will receive a minimum payment of $2,000, even if they are not required to withhold tax.
- The Boosting Cash Flow will be applied for a limited number of activity statement lodgements. The ATO will deliver the payment as a credit to the business upon lodgement of their activity statements. Where this places the business in a refund position, the ATO will deliver the refund within 14 days.
- Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020.
- Monthly lodgers will be eligible to receive the payment for the lodgement months of March 2020, April 2020, May 2020 and June 2020. To provide a similar treatment to quarterly lodgers, the payment will be calculated at three times the rate (150%) in the March 2020 activity statement.
- The minimum payment will be applied to the business’ first lodgement.
2. ENHANCING THE INSTANT ASSET WRITE-OFF.
The government is increasing the instant asset write-off (IAWO) threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million).
- This proposal applies from 12 March 2020 until 30 June 2020, for new or second-hand assets first used, or installed ready for use in this timeframe.
- Enhancing the IAWO will require legislative changes before it can take effect.
Backing business incentive
- The government is introducing a time-limited 15-month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions.
- A deduction of 50% of the cost of an eligible asset on installation will apply, with existing depreciation rules applying to the balance of the asset’s cost.
- Eligible businesses – businesses with aggregated turnover below $500 million.
- Eligible assets – new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (that is, plant, equipment and specified intangible assets, such as patents). Does not apply to second-hand Division 40 assets, or buildings and other capital work depreciable under Division 43.
- Assets acquired after the announcement and first used or installed by 30 June 2021.