Top Tips for Business in Challenging Times
Do the basics well, have a plan and act on it. These are the keys to getting through these turbulent times, says a local business expert.
Director at BDO Christchurch, Phillip Roth, and senior strategy analyst Rhea Cowell have been supporting Christchurch businesses as they react to the fallout of COVID-19. The first two weeks focused mainly on accessing the wage subsidy and managing large upcoming expenses such as leases.
However, many businesses still need to cover the basics, and it is crucial to ‘not sit around’ as Alert Level 3 gets closer, Roth says. This is particularly true for hospitality and retail businesses who need to identify what they can provide under Level 3 restrictions.
‘’You should be ready to move online and have contactless payment systems set up, for example.’’
Roth advises undertaking scenario testing all the different options for operation under Level three and ‘pulling [those scenarios] through your financials’.
‘‘Let’s also remind ourselves that construction, forestry and transport among others are looking to gear up … that’s a big part of our economy and good for the region to see GDP gears cranking again. That, in itself, will drive supply and demand for things like fuel, maintenance, food etc.’’
Many business owners are also feeling isolated, Roth says. It is a good time to seek out mentors, leadership and support in the business community.
Top Tips for Businesses
1. Cover the basics
Look at your immediate critical cashflow
Do a 90-day minimum forecast, but do not get too far ahead in scenario planning. Ensure your reporting is up to date, make sure all debtors and creditors are recorded. Start talking to your bank, landlords and suppliers. ‘’Nine times out of ten, we’re finding most are open to negotiating terms.’’ Consider also the suppliers to your suppliers - look at the domino effect of impact on those suppliers in the chain above – and make a contingency plan that factors this in.
Ensure you’ve accessed all support available – don’t be afraid to seek help
Roth says the team is still picking up some businesses who are eligible for government support such as the wage subsidy but do not feel like they should access it. ‘Government support exists for a reason – it’s just necessary to do this right now.’
There are also many not yet doing the basics like talking to their landlords, he says.
Roth cautions that government-backed loans were not ‘a silver bullet nor an easy process’. However it is still an opportunity to consider if credit is needed – as long as businesses can demonstrate they meet the criteria, have a good rationale for the loan, and can show via through detailed business management plans and forecasts that they will be able to service the loan.
2. Assess the impact and make a plan
Consider COVID-19 impact on areas such as cashflow (including tax options), health and wellbeing of stakeholders, debtors and creditors, future sustainability, diversification options.
Create an action plan supported by an integrated cashflow forecast. Explore more ideas.
Make sure your action plan is based on facts and advice from reputable sources. There is only one way of implementing enforced leave provisions, for example. Professional advice is available through the Regional Business Partner Network, or the ChristchurchNZ Business Support Subsidy.
3. Communicate regularly and well
Communicate fully with your network (staff, key stakeholders, directors, suppliers, bank, and clients) to get as many as possible on board and ensure everyone is aligned with the plan.
4. Be prepared to act
If you have to make tough calls, seek support and ensure these decisions are also based on fact. Roth says many people are waiting to act and not ‘doing what is right for the business’ – which means they may hurt staff more in the long run. Ensure that if you are keeping on staff under new terms, these terms are negotiated correctly.
5. Be prepared to measure
Assess impact regularly – and be as accurate and realistic as possible. Ensure everyone knows what they are responsible for.
6. Make your Business Continuity Planning realistic
Don’t look at just the worst-case scenario – and equally don’t leave your head in the sand.
‘’Jot down all the potential options and unpack each. Get it out of your head and on paper … create a tangible action plan, with a focus on 90 days ahead.
‘’If you can get yourself to 80 per cent of what you were in six to 12 months, what does that look like? Draw on your cash reserves for three months, access government support – do what you need to do to get there. You’ll find it might not be that hard to meet that goal.’’
7. Stay positive and focused
Cowell says it is important to find the time and space to look after your own mental and physical wellbeing. Be mindful of developing good habits, give yourself a break from negative news, and allow yourself to switch off.
Looking to the Future
While Roth’s team have not yet seen many businesses pivot into ‘wildly different’ areas, other than businesses who were already planning on diversifying, a ‘new normal’ needs planning for too.
Roth also expects some businesses might want to sell and realise a sensible level of capital, and that there is likely to be mergers and acquisitions, as it may not make sense to recreate complex or extreme cost structures multiple times in the current environment.
ChristchurchNZ Business Advisors can help businesses access support from providers such as BDO via the Regional Business Partner programme and the ChristchurchNZ Business Support Subsidy. Explore more.