To be feeling nervous about your business (and in general!) is not only normal, but to be expected under the current situation. Not knowing how long this lockdown will last is the hardest part of it.
As there are a lot of uncertainties at the moment, it's a good idea to look for the things you can control and be proactive. If you're not getting any support or information from your accountant or business advisor, ask for it! Or get in touch with us and see how we can help. In the meantime, we've put together some key steps that you can take in your business today, to help you ride out the next few weeks and months.
Cash flow is a simple equation of cash coming in, and cash going out. If you've got little to no cash coming in, look at what cash going out you can reduce. One of your biggest outgoings could be the rent on your premises, so talk to your landlord. They may be able to reduce your rent for the next few months, and then spread what is owed across 6 months after that. It might be that you can manage without a work premises altogether and work from your home for the next 6 - 12 months, after the lockdown of course! This could give you the cash to see you through.
Have a conversation with your suppliers. If you think you won't be able to pay them for a while, talk to them about any options they might be able to offer. A lot of businesses are in the same boat right now, try and find a solution together.
Can you utilise the government tax changes? There have been significant changes to some of the New Zealand tax legislation since COVID-19, including changing provisional tax thresholds, and allowing late payments on tax bills. We've covered these in one of our podcasts here, but we urge you to speak to your accountant or Inland Revenue about how this could work for you.
If you haven't looked into the wage subsidy from the government yet, do it now. If you're eligible, this is immediate support for you to pay your staff.
If you have anyone that owes you money, look for ways to bring that money in now. You could look at a discount if they can pay you this week. That cash minus a 20% discount is worth a lot more in your hand, instead of being in theirs. If you're in a position where you can offer vouchers for your products or service, this is a great incentive to get people to spend money with you now. This will also guarantee customers at a later date, who will likely then continue to spend!
Write down a plan
Sitting down to write out just 2 or 3 things that you could do to improve your current situation in your business will help. By writing it down it keeps you accountable and more likely to do it, and you'll also feel good for being proactive!
Look at all your cash coming in and your cash going out, and make some calculations and notes on the following:
- Essential spending in your business - what do you need to spend now, and for the next month or two.
- Costs you can shave, is there opportunity to delay paying suppliers etc.
- Who owes you money? Get that money quicker by offering a discount.
Write out all the facts and figures and you might be really surprised at what you can achieve. Take back a bit of control in this environment, it doesn't need to be perfect.
Talk to your bank
If you need more cash and are looking to the bank to fund it, you will need to go into that conversation prepared. Have a written plan of how you're going to manage the next few months and beyond, and what you need to do it. That will put you in a better position when it comes to talking to your bank. The government have also just released a Business Finance Guarantee Scheme, which is available for businesses that have an annual turnover between $250,000 and $80,000,000. Basically, the government will take 80% of the risk on any loans for eligible businesses, and the banks will take the other 20%. We have a podcast on all this coming soon, or check out business.govt.nz for more details.
Look after yourself and your family
Make sure you're looking after yourself and your family above everything else. The Mental Health Foundation has a support page on their website with some great tips. And don't forget you can access the Xero Assistance Programme for free if you're a Xero customer. This will give you access to free and confidential wellbeing support.
Hub of information for business owners
Head over to our Facebook Business Hub page, there are some really useful updates and discussions happening on there. This page is managed by RightWay business advisors, tax experts, and HR advisors to keep you updated on news and information for your business. Because there are changes happening all the time, this is a great space to connect with experts on what it might mean for you.
Please don’t hesitate to reach out to us for support and advice. We have business advisors, accountants, and HR specialists that can chat to you about how to navigate these challenges, what options you have in your business, and they can work through a step by step plan with you. We have a video meeting system which means we can meet and talk to you from anywhere.