Episode Summary – Owner’s Fast Action List To Survive A Downturn

Introduction 

This is a special episode of The Should I Own A Business Podcast with advice on what business owners should be doing now to survive the COVID-19 downturn.

Remember, Listen Before You Leap.

 

Links and resources

Blog-Thinking of owning  a business-would you be successful?

Self Assess Your Readiness with our Business Readiness Test

Blog- Is this a bad time to start a business?

Blog -What should a business owner be doing  now to survive a downturn?

Harvard Business Review – How To Market In A Downturn

We have listeners and followers from existing and new businesses, and they are wondering what they should be doing now.

Geoff and I are business mentors working in the SME sector. 

Geoff has many years of experience in disaster recovery, and I have managed FMCG businesses through several downturns.

We will share our real experience with you.

Keeping healthy is the first priority

Look after your health and that of your family and friends. Also, look after your staff members – we are all in this together.

We won’t talk about specific health-related advice in this episode – you need to listen to the authorities in your country. We’ll generally talk about the things you need to do in your business to pull through

The situation is changing in different parts of the world and government s are throwing money at keeping businesses afloat and people in work even though it appears likely that there will be mass shutdowns everywhere.

If you are one of our audience who are wanting to start your business in the future, but the current crisis has completely spooked you, I would say “don’t give up on that dream”. This will turn at some stage, and while it will likely take a while to recover there will be lots of opportunity out the other side. So, keep learning, keep planning, use this time as best you can to prepare for what can still be a bright future in your own business.   

Business Owner’s Fast Action List 

5 Attitudes for YOUR  business owner mindset.

10 Action points to do NOW for your business.

If this is your first experience of managing in a downturn, then it can be quite overwhelming.

Australia has enjoyed a long period of growth, and we were relatively unscathed by the GFC compared to some countries.

We have a whole generation of business owners or managers who have never lived through turmoil such as we see now.

We are here to help.

5 points for your mindset and leadership.

Stay calm so that you can think clearly. Being irrational or making knee jerk reactions will not serve you well. Take a deep breath!

The sun will come up tomorrow. There have been many downturns and recessions before, and they are not new.

While the government statements have suggested six months of turbulence that may be over cautious. It could be less, perhaps 1-4 months, not the full six.

Do not be too negative or defensive as this may harm your business even more. If you are not “present” in the market, you are not likely to get sales. So be there and don’t withdraw.

Be mindful of recovery. The temptation is to cut marketing and R&D when times get tough, which can be counterproductive when a recovery happens. Businesses that are well-positioned for a comeback will bounce faster and get stronger more quickly than their competitors.

Do not procrastinate and act fast.

10 Fast Actions List.

1 Review your budget now starting with a detailed Cash flow forecast.

Do three versions-what you expect to happen, one that is better than you expect and one that is a worst-case scenario.

Knowing where you are is vital, so you don’t get shocked by unexpected bills.

Please speak to your customers for any forecast they might be able to share with you.

2 Remember you are a part of a supply chain so talk to your suppliers straight away.

Agree on a plan with them and see if you can extend the payment terms.

Your cash flow forecast will help you work out what you can pay and when. 

Review any supply agreements or terms and conditions that exist with your suppliers.

There may be force majeure clauses you can invoke if you cannot mutually agree to terms. 

Get professional advice if you do not understand these terms.

3 Talk to your landlord straight away. 

Agree on a plan with them and see if you can reduce the rent.

Your cash flow forecast will help you work out what you can pay and when. 

Perhaps you reduce rent payments now, in return for higher payments later in the year.

4 Call your Tax Office if you need to enter a payment plan to spread your tax payments and help your cash flow.

5 Approach your lenders or bank early.

With a good cash flow forecast and a clear plan, your lender will have more confidence to help you.

If you have spoken with your suppliers, customers, landlord and ATO, you will come across as competent and proactive.

6 Staff and contractors.

Consult with your staff and contractors to find out their views or how they can help. They will respect you for this, and they understand the risk to your business and their income.

You may be able to stand down casual employees or contractors.

Get professional advice if you are not sure how to change an employees terms or to make them redundant.

Remember though, that if the downturn passes quickly, you will need them back again. Do what you can to keep your staff.

7 Review your insurance policies

If you have a business interruption policy advise your broker as soon as possible if you may need to claim.

8 Don’t withdraw from the market

Cutting marketing or new product development often happens in a downturn.

Be careful that you don’t waste what you have invested in brand marketing or product development by withdrawing from the market.

Here is a link to an HBR article about what has worked in previous recessions.

9 Find new ways 

Get creative and do things you have not tried before. Everybody will be more receptive, and you might be pleasantly surprised.

10 Keep focused 

Review your cash flow forecast every day and be agile in how you respond. 

Keep a lookout for any new government stimulus package. 

Act fast and decisively-do not procrastinate as you may burn through more cash.

Disclaimer

The information contained in this podcast is general and does not take into account your situation. The content does not constitute legal or financial advice and should not be used as such. You should consider whether the information is appropriate to your needs, and where applicable, seek professional advice from a financial adviser or lawyer in your jurisdiction. To find out more, please go to www.ShouldIOwnABusiness.com.