While Australia felt some of the headwinds of the GFC, our economy hasn’t had a recession since 1991. Since then, the country has enjoyed an economic growth rate of 3.3 per cent. However, Covid-19 has led to two-quarters of decreasing GDP, which technically puts us in recession. It’s critical that small business owners put strategies in place to navigate these tough economic times. It is also possible to come through the other side stronger and more profitable. Here we share five things you can do to help your small business survive this recession.
Adapt your strategy
One of the best things about being a small business owner is the ability to be nimble. You can change your strategy and operations quickly if needed, which is much more difficult in larger organisations. Remind yourself of this when you have the opportunity to change something, even if it’s challenging.
To help your business survive this recession, it’s critical that you review your strategic plan and identify if and how it can be adapted. For example, you may need to delay planned investments, or perhaps you may decide to bring forward a review of your business’s financial management.
Review your budgets
Budgets are often the first thing that business owners review when they’re recession proofing their business. A review of your costs should include the last two to three financial years (if applicable) of all types of business costs. Review these budgets from the view of determining which costs helped the business most in remaining profitable and growing.
Be careful not to be too aggressive with cost-cutting. It may slow your productivity and hinder your ability to take advantage of new opportunities in the short to medium-term.
Consider new opportunities
During Covid-19, we have witnessed businesses around the world adapt their operations to meet demand for new products and services. Alcohol distilleries have started producing hand sanitiser. Fashion houses have adapted their manufacturing operations to produce face masks. Fine dining restaurants have launched into home delivery.
What once may have been considered impossible has been brought to reality in these unprecedented times. So take a step back and consider the opportunities arising from shifting demand for your business. Is there a way you too can build new revenue streams by adapting and serving new customer bases?
Consider available support
A natural inclination to solve problems on your own is probably what makes you a strong small business owner. However, it doesn’t hurt to research and understand the different support and funding options available.
Start by finding out what Government support is available to your businesses. The NSW Government also has grants and loans available to help small businesses survive this recession, particularly for businesses looking at growing new revenue streams. Also look to private companies such as Facebook who are offering up to $100 million in cash grants and Google who are offering up to $340 million in advertising credits.
If you don’t have adequate cash reserves, you may also need to look at different funding options. These options include taking on more debt, bringing in new investors, or re-structuring the way your business purchases its assets, for example, moving to an AASB 16-compliant lease structure. The key here is accessing enough finance for liquidity without the business becoming reliant on this funding for solvency.
Get help when you need it
Owning and running a business isn’t easy and it can be lonely shouldering the responsibility on your own. Consider finding a good accountant to provide objective advice to help your small business survive this recession. They can also help you to implement these strategies and others unique to your business. The investment is likely to far outweigh the costs of going down the wrong path and will guide you through to brighter days ahead.
Rebecca is passionate about promoting the positive impact of quality financial advice on personal wellbeing. Read her full bio here.
