7 Financial Tips for Small Businesses Operating during COVID
The COVID-19 pandemic changed the operating environment for thousands of small businesses around the world. In Australia, many companies are struggling to stay afloat. Small business owners have to rethink their strategies, adjust spending, and review cash flow management.
Operating a small business during a crisis requires a serious approach to finances. One decision can make the difference between weathering the storm and closing down. These financial tips can keep your company in good shape and become the catalyst for growth strategy improvement.
1. Evaluate Your Business Expenses
If you are reading this article, your business is affected by the pandemic. To start making changes, you need to evaluate where you stand.
- How hard were you and your competition hit by the restrictions?
What extra costs are you incurring?
- Do you need to plan for reopening (or maybe you are working in a restricted manner)?
- Do you need to offer new services to accommodate your current clients’ needs?
Then go on to evaluate each of your business expenses. You may be surprised at how many payments you could reduce or defer at this time.
- Operating costs like mortgage, rent, and utilities (moving your business online, at least partially, can solve many issues)
- Supplies, materials, equipment
- Legal expenses
- Employee wages and salaries (payroll cuts are never ideal, but during a crisis they can be a reasonable solution, even with the Government assistance options available)
While not all of these expenses may apply, making a list of them can help you start looking for opportunities to cut costs.
2. Focus on the Cash Flow
While your priority is the long-term success of your business, during the crisis, it means focusing on short-term survival. Take a closer look at which expenses aren’t having a direct, positive effect on your cash flow.
You may want to cut some of them entirely while scaling back on others. Review subscriptions, memberships, and other recurring expenses. Network with similar companies in your industry to share financial tips.
Try to reduce business expenses by moving as much work as you can online. Working remotely doesn’t just help you cut office costs (coffee, paper, stationery etc.) but can improve employee satisfaction as well.
It may also be a good idea to opt for a smaller office space during a crisis to reduce rent payments, or you could eliminate on-site work altogether.
It’s time to turn on the survival mode. You can only keep the expenses that are vital to your company’s existence.
3. Reduce Marketing Costs
While marketing during the pandemic is an integral part of staying afloat, its costs can be hard to handle. If you are working with a marketing agency, you may want to rethink or renegotiate the contract.
Many marketing tactics can be implemented without professional assistance. Sufficient information readily available online about general marketing strategies as well as DIY social media tactics.
You could also rethink paid search marketing strategies and focus on organic marketing that brings long-term results and requires less financial investment.
4. Explore Government Support Options
The Australian government created many programs to support small businesses during this crisis. Both the Federal Government and individual States are introducing these programs to help small companies.
Even if your business is holding its own, don’t hesitate to check if you are eligible for any of them.
- JobKeeper Payment
- SME guarantee scheme
- Payroll tax relief (depending on your State or Territory)
- And more
If you don’t know which support program you can take advantage of, consider asking a financial advisor for help. By applying to as many as you believe to be suitable, you can lighten the financial burden and get a better chance to weather the crisis.
5. Separate Business and Personal Finances
If you haven’t done this already, a crisis is an excellent time for business and personal finance segregation. Using your personal money to fund your company’s needs and vice versa can wreak havoc on both.
By separating personal and business expenses, you can have an easier time monitoring your cash flow and making cost-cutting decisions. You can also get a clearer picture of what your company is lacking.
6. Plan for the Future
Eventually, the pandemic is going to end. Australian federal, State, and Territory Governments are already easing the restrictions. Small business owners need to do research to get an idea of what their industry will look like after the pandemic subsides.
Making long term plans without turning off the survival mode can be tricky. However, without proper budget planning, you could be facing another disaster once the “new normal” settles in.
You need to plan for bringing employees back to work, renting larger spaces, re-establishing contracts with suppliers, adjusting to new trends, and much more.
7. Ask for Help
Australia has been dealing with the COVID-19 crisis for a number of months now. During that time, business consultants and financial advisors have gained experience in what it takes to keep companies afloat. Sometimes it pays to ask for expert advice.
Even if your business has been doing fairly well during the pandemic, investing in expert assistance can give you a new perspective and help optimise workflow and cashflow.
Keeping Your Business in Good Shape during the Pandemic
Regardless of your current financial situation, the key to surviving the crisis is exploring all the available options. If your business is struggling, now is the time to consider reinventing your offering or even accessing support from the government.
What you can do starting right now is turn on your business survival mode, focus on cash flow, and cut unnecessary expenses.
While you are reviewing financing options and optimising the expenses, employees still require your attention. At Nationwide Super, we can help you set up employees’ superannuation and help you understand your contribution obligations. For more information, please contact us at a convenient time.
Please read our disclaimer here.