lf you are a Director of your company or someone else’s company these are difficult time for you. Here are things to think about:
Ensure the company is registered for the JobKeeper payments so you can keep staff on and receive this subsidy. Also ensure your BAS is lodged showing PAYG (if any) so you can receive the cash boost grant over the next 3 BAS quarters.
Perhaps talk to your bank about suspending any loan payments for 5 months. A client applied one day and had it approved the next so the banks are moving fast on this.
Check your cash flow forecast or projections (you should have one to review monthly) to see what the bank balance looks like for the next 6 months, including any government payments coming in.
Manage your staff carefully and try to only stand them down rather than terminate. However with JobKeeper you should be able to keep them on the payroll at least. You do not want to have to find and train staff again when this is over.
There are Fair Work considerations to take into account when considering the duties they will perform during the downturn. A conversation with employees will usually arrive at a reasonable answer but be sure to document your agreement in writing.
The Government have relaxed insolvency laws for 6 months so that Directors are not held liable if this happens. That does not mean you do everything you can to avoid this of course. Close monitoring is needed by all Directors at this time.
lf necessary the Directors should meet more regularly than normal to review the situation with corona virus impact and not leave it to the old meeting schedule and agenda. You are legally obligated to protect the company and its shareholders so put the time in.
Start planning for a recession later this year. Think about what that will do to your business and how you plan to survive that. Talk to your accountants and prepare for it. I think all well run businesses will get through the virus phase and the recession phase and emerge stronger in the future as the economy rebounds.
Have a clear policy about refunds and credits for your clients. lf you offer 100% credits that will be a liability on your balance sheet that you will have to honour next year and impact cash flow. The ACCC is ok about credits for less than they paid, less the true costs of that product or service. No refunds I suggest as you need the cash to survive. Make sure all your loyal clients know your policy about this.
PREPARING FOR RECOVERY
Think of this time as being useful to refresh your business, website and product/services range so you have an attractive offer when this is over. Review your systems and staffing too.
Depending on your business situation think about continuing marketing, maybe at a lesser rate. lt is important that you keep in touch with all past clients on your database and keep your brand out there for when we get back to normal. Plan now for new revenue after this is all over and not leave it until then. People will forget you.
IN THE WORDS OF WINSTON CHURCHILL…
“Never waste a good crisis”. Use this opportunity to re-evaluate, refine and redesign your business model and value proposition. With a little strategic thought, you have the opportunity (and perfect excuse) to create your next version of the business; one that will be stronger and more resilient than ever.
NEED A HAND PLANNING YOUR WAY FORWARD?
Contact us anytime if you need advice or help responding to the current crisis. Even if you are not a client, we’re happy to our bit to support all businesses at no cost.
Graduate of the Australian Institute of Company Directors and Chairman of a number of family and private enterprises, Matthew is the founder of Board Associates and specialises in innovation and strategic marketing.