Coronavirus (COVID-19) is impacting Australia for a longer period than initially estimated. It will definitely get worse before it gets better, and the government will continue to tighten up on movements, gatherings, travel, business activity and self-isolation.
This will, as it has done already, make it very difficult for businesses that offer non-essential goods and services.
In the next few days, you should take time to actively plan ahead and take defensive actions quickly to strengthen your business model. Think laterally and aggressively for other revenue opportunities to keep the business moving forward. Whilst this crisis may turn around and pass quickly, the chances are high it will not, and so we need to be proactive and preemptive.
Each business is different and whilst this message is general in nature, its purpose is to start you thinking laterally about your particular business.
Here are a few quick general suggestions:
- Chase payments from customers to bring in cash. Offer a discount if they pay on or before the due date. Alternatively, if late, offer a discount anyhow and tag it as “support for these difficult times ahead” but add in an updated due date to access the discount. Remember that at the moment ‘CASH IS KING’, not whether you made 50% margin.
- To help move inventory levels and bring in cash, offer specials for your goods and offer an extra discount to pay upfront.
- Ask large suppliers for extended terms.
- Do not pay deposits for goods, as you have no assurances of delivery dates, especially if factories close.
- Pick up your online presence and look for more channels to move products/services.
- Talk to suppliers and customers about their COVID-19 plans and issues.
- If your business requires contact with others (humans), assure them of your conditions, travel history etc. but also ask customers to provide information about their recent activities, especially if meetings are via an appointment. This will give them confidence that you are being diligent. Wear gloves and masks.
- Ask staff to be diligent at work and ensure they provide information to you and others if they are going to at-risk places. Ask employees to try and stay distanced as per media suggestions and limit contact with each other. Ensure there are effective sanitizers at work. Offer masks and gloves if it helps.
- Stay fit to boost your own immunity.
- Offer customers and suppliers educational material.
If you would like to set up some time for discussion specific to your business, please do so ASAP. If people are getting emotional about toilet paper and this gets worse, it’s likely to be a rocky road ahead.
Government Stimulus Package
Our Government has acted quickly to respond to the economic impact of the Coronavirus with assistance for SMEs and stimulus to certain individuals.
Below is a table summarising the planned stimulus.
|STIMULUS||Detail||Timing||Eligibility/opportunity||Immediate impact (Cash)|
|Instant asset write-off||Instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million.||until 30 June 2020||N/A|
|Accelerated depreciation||Accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.||until 30 June 2021||N/A|
|Boosting Cash Flow for Employers||Business with turnover of less than $50 million that employ staff.
50 per cent of PAYG withheld, with a minimum $2,000 payment and up to a cap of $25,000 over 6 months.
Provide up to $25,000 back to small and medium-sized businesses, with a minimum payment of $2,000 for eligible businesses. The payment will be tax free.
|1 Jan–30 Jun 2020||Assume this would be happen through BAS process (details required)
|Supporting apprentices and trainees||Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.||1 Jan-30 Sep 2020|
|Stimulus payments||A one-off $750 payment to social security, veteran and other income support recipients and eligible concession card holders. Around half of those that will benefit are pensioners.||From 31 Mar 2020||N/A||N/A|
|Support for Coronavirus-affected regions and communities||Regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education.||ASAP|
The package of Bills will be introduced into Parliament in the final Autumn sitting week in March 2020 (23-26 March) for Parliament’s urgent consideration and passage. Following passage of the Bills through Parliament, the Government will then move to immediately make, and register, any supporting instruments.
Tips to Assist
CPAs have also prepared a detailed summary of tips to assist small business prepare for the business implications of COVID-19. Click here to view it.
Economic Impact of COVID-19
For more details on the worldwide impact of COVID-19 and potential scenarios, we recommend reading this article by McKinsey & Company (particularly the section on Economic Impact).
Help and Advice
If you have concerns about your business’s ability to withstand the economic impact, please feel free to call us. We are happy to discuss your individual situation and how you can prepare your business to cope and emerge in good shape when the storm subsides.
Free Business Coaching for COVID-19 Crisis
In light of the current economic conditions, CFO On-call would like to offer free of charge coaching calls to help you during this unstable and difficult time.
No doubt we are all under pressure one way or another. We at CFO On-Call are also finding it difficult to navigate, but we have been through multiple challenging market conditions in the past and understand how stressful it can be, and how helpless it can make you feel with no one to talk to.
We can offer valuable insight into how you can strengthen your business profits, balance sheet and working capital, and at minimum, act as a sounding board to go over business questions and stresses.
It is very important to become proactive, resilient and adaptable to change, but more important to act quickly when there is a sudden change.
There are no sales pitches attached. We have half hour sessions available in the coming weeks for businesses of any size. Please contact email@example.com or call us on 1300 36 24 36 (Aus) or 0800 180 400 (NZ) to book a free 30 minute coaching call.
Promo code: “COVID19HELP”