When you start a business, no one hands you a manual for dealing with events like COVID-19. It’s hard, it’s scary and it’s confusing. If you’re a small business owner fighting for survival and not sure what you should be doing in this time, here’s a basic checklist.
As the situation around COVID-19 continues to evolve at pace, it’s created a great deal of uncertainty for businesses and business owners.
Here in New Zealand we are two weeks into alert Level Four, whereby schools and non-essential businesses have closed their premises – a nationwide lockdown measure by the Government to curb the spread of the virus.
While the true scale of the economic impact remains to be seen, there are undoubtedly going to be very challenging times ahead.
As Kiwi SME owners look to mitigate any potential fallout for their business, particularly over the level 4 lockdown, there are a number of things they can be doing to help weather any current and future hardships.
Communicate with your customers
In this current environment, one of the most important things small businesses can do is to clearly communicate with customers.
Even though the situation is evolving fast, it’s critical that you keep customers updated and informed about the plans, changes and precautions you’ve put in place.
With some businesses able to keep operating, don’t assume that your customers know if you’re open or closed for business. If you are open let them know if you’re changing your hours, and what steps you’re taking to keep your employees, customers and work environment safe and clean.
Likewise, if your business is temporarily closed due to the restrictions, notify your customers on your social media channels, through email and on your website. Remember to be transparent and keep them updated with further developments as they arise. If you’re likely to have supply-chain disruptions, be open and honest – and let customers know there may be delays. They will appreciate clear communication among all the uncertainty, and it can help avoid confusion and disappointment.
Monitor your cash flow
Whilst staying on top of the financial health of your business will be hugely important over the next 12 months, there are some things business owners can be doing that might help protect their cashflow:
Speak to your landlord for relief on rental payments
The old adage “if you don’t ask, you don’t get” couldn’t ring truer than now. If your business is likely to be impacted by the shutdown, consider talking to your landlord sooner rather than later to discuss your options. This may include a temporary rent holiday or reduction.
Tax relief and wage subsidy
If you are experiencing disruptions to cash flow, get in touch with Inland Revenue Department early to discuss your options. If you’ve been impacted by the downturn in business due to COVID-19, you may be eligible for tax relief and income assistance. For instance, late payment and filing penalty write-offs and instalment arrangements for tax debt – to name a couple.
If you can show a 30% or higher loss of revenue due to COVID-19 on the same month last year, or if you’ve been in business less than a year, a 30% drop in revenue since January, consider (if you haven’t already) applying for the NZ Government wage subsidy to help pay your staff and/or yourself if you are self employed. For a small business guide to the government’s economic stimulus package, check out this infographic.
Review and reduce unnecessary overheads
Now is the time to examine the amount of cash you have on hand and explore ways you could cut or streamline costs. Could you reduce discretionary and non-essential expenses? Make a list of all your financial commitments such as wages and KiwiSaver obligations; operating costs like rent, insurances, utilities, and inventory; and tax obligations – and ensure they are properly managed. For instance, look online and explore price comparisons on major bills such as internet, phone provider, and energy bills and see if you can hunt down a better deal.
Explore financial support options
If finance is needed, then it’s best to start exploring your options early. Don’t be afraid to seek professional help from an adviser or accountant to discuss your financial support options too.
The Government’s initial $12.1billion economic stimulus package has put measures in place to cushion the impact for small businesses including: provisional tax relief, wage subsidies for affected businesses, depreciation deductions reinstated for commercial / industrial buildings, as well as immediate deductions for low-value assets. The Government has also released additional financial schemes and packages to help Kiwi small and medium-sized businesses throughout this time.
As this is an ever-evolving situation, it’s important to keep informed by regularly checking for updates as they may affect your business. Taking early action, being agile and as innovative as possible, may put your business in a better position to navigate the difficult times ahead.