FOCUS ON RECOVERY
As social restrictions ease across most of Australia, business owners are preparing to trade in the new normal. ‘Business as usual’ is unlikely to reflect pre-COVID-19 operations any time soon in many sectors, and even those outside the worst hit industries will experience the persistent effects of the recession. In some industries, many businesses suffered few direct impacts and may be expecting they will come through the global economic fallout unscathed. In contrast, the crippling effects of social restrictions and prolonged presence of COVID-19 on the hospitality, tourism and entertainment sectors will leave lasting scars. All business owners need to recognise the imperative for decisive recovery action and resilience planning strategies to equip them for the immediate and medium-term future.
While government subsidies have allowed many businesses to retain staff through the early days of the crisis to re-opening, some businesses will struggle to re-employ their full workforce initially in the face of ongoing changes to their industry. Business recovery is critical to stability and security of your business and your employees.
The first step is to establish your re-starting point. The general easing of restrictions in Australia has coincided with the end of the 2019-20 financial year, so completing your 2020 financial statements will give you genuine figures to work from. Knowing where you are now will help to shape your path to the future.
Comparison with previous years’ monthly profit & loss and cash-flow statements will illustrate your current financial health.
Benchmark your previous performance against comparable businesses to reveal strengths and weaknesses of your operation going into the crisis, and areas where you can improve your profitability. Despite changes to the way we are now doing business, these will still be relevant. What does your current cash flow look like now and what is the forecast? If you negotiated rent, loan creditors’ or other payment deferrals, or received a business support loan, how will you go about repaying these?
As you re-start, you will need to meet further requirements for staffing, supplies, utilities etc. If you were receiving wage support payments, you will need to consider how you will manage your employee obligations once these cease. In some businesses, more staff will be required to manage social distancing requirements, whereas reduced demand might require staff reductions in other businesses. You may need to use more of your cash reserves, if any. Are you able to convert some assets to cash without compromising future returns?
An important early action is to recover revenue. Short-term, high-impact options include reducing prices for products and services that have elastic demand and introducing or expanding e‑commerce availability.
Measures with a longer-term impact include brand repositioning and highlighting the customer experience through tailoring products and services to changed uses. Identify which approaches best fit your business model, then act quickly and decisively. If your café/restaurant customers now show a preference for takeaways over dining in, you may need to increase your takeaway offerings and adapt your processes to manage the change.
Your hairdressing clients may now choose to extend the time between appointments after being forced to wait while your salon was closed. You might need to introduce special promotions, following the initial catch-up period, to boost re-engagement or win back clients who migrated to other salons that did not close. Use available data to maximise returns on expenditure e.g. ensure that your marketing budget is, at a minimum, paying for itself through channels that grow your business.
Develop measures that will deliver increased revenue and expand your customer base. This will generate confidence within your business, which will feed customer confidence.
While all of these measures may seem overwhelming, they can be done in a stepped process. The AAA Consulting Team has the experience and expertise you can trust to help.