Without a doubt, this is going to be the most testing period for an entire generation of business owners. We will all remember which companies behaved with integrity and compassion and which ones didn’t. Our Prime Minister has reiterated we need to be kind to our fellow person in what are extremely stressful and trying times for all business owners. With these core messages in mind, ABC Business Sales have announced that they are opening their doors and phone lines free of charge to any business owner requiring business advice in the following areas:
- Cashflow management/forecasting (Excel forecast templates provided)
- How to effectively communicate with your bank and what documents they will need (checklist will be provided)
- Details on what government subsidy is available for your business
- Business valuations/appraisals Pre-Covid19 and Post-Covid19
- Exit strategies for your business and what is required to maximize value in this new environment
The ABC Business Sales team is a made up of experienced bankers, accountants and business owners who cover a number of languages including Chinese, Korean, Punjabi and Hindi and all of our staff have particular expertise in a number of sectors including Hospitality, Childcare, Accommodation, Retail, Import & Distribution, Transport, Healthcare, Industrial and Tourism. Any business owner can call ABC’s 0800 number to make a phone appointment, or send an email to the following address: email@example.com.
The only details business owners need to provide are:
- Business Name
- Contact phone number
A specialist will be in touch to arrange a phone consultation, providing a range of business advice.
Businesses will have a higher probability of first surviving and then prospering if they take a structured and planned approach to the initial lockdown period and any further disruption periods. By breaking down the upcoming business environment into phases and then reviewing each phase and what characteristics are likely to arise, a structured strategy and planned approach can be applied to each phase for your business. Reducing one big problem into a series of smaller challenges will make the task ahead look less daunting and more achievable.
Chris Small, managing director at ABC Business Sales believes the five distinct business phases over the next twelve months will be:
1/ Business conditions with full lockdown periods & Covid19 present & growing
2/ Business conditions with partial lockdown periods & Covid19 present & controlled
3/ Business conditions with no lockdowns and minimal Covid19 present & reducing
4/ Business conditions immediately post the removal of Covid19
5/ Business conditions return back to pre Covid19 levels
“Today, I want to focus on phase 1, these are the business conditions which we are about to enter into for the next four weeks with full lockdown periods and Covid19 present & growing,” says Small. “There are three key areas I believe business owners need to focus on, and if they do this effectively they will have a higher probability of surviving and reaching the second business phase.”
The three key areas as outlined by Chris in order of priority are:
1/ Cash and liquidity is king during any business recession, cash is the lifeblood of any business and even more so during recessionary times. You can manage this area by:
- Generating a cashflow forecast that is updated daily or weekly depending on the size of your business. Use your actual bank balances as a starting point and add in upcoming receivables and creditor payments to provide forecasted balances. The forecast should be for a minimum of six months, Small’s recommendation is 12mths.
- Get in contact with your bank ASAP and provide them with your cashflow forecast. This is the document all banks will be most interested in, as it will allow them to calculate what level of extra credit you will need to maintain your business. Request a 20% buffer on top of the cashflow balances your forecast shows.
- Apply for all the relevant government subsidies available and add this to your cashflow forecast.
- Before committing to any creditor payments, confirm with all your customers the exact days they will pay your invoices; it is a common mistake for many business owners to pay creditors under the assumption their customers will pay on time; receivables are likely to be delayed during a full lockdown period.
- Go through your creditor list and mark what is essential to running your business and what is not. For the creditors that are not essential, make contact with them and request relief for a period of time.
- Your list of creditors in order of priority should read as follows:
- Essential staff (they need to be paid for the continuation of business)
- Essential creditors (they need to be paid for the continuation of business)
- Non-essential staff (discuss options including reduced wages and leave without pay options)
- Non-essential creditors ( discuss options to delay, extend or defer payments)
- If you follow the above steps, you have a high probability of getting through this lockdown period, especially given the uncapped wage subsidy and the $500k government-guaranteed bank loan, which is now available to the majority of businesses.
2/ Hold onto key staff
- Obviously, the first key element to retaining key staff is continuing to pay them for their services; the above actions will ensure you have appropriate cash reserves to pay your staff.
- Be transparent with your staff on all issues and as much as possible, follow the “no surprises” approach. They will respect you for your transparency, and this will generate more loyalty to the fight.
- Include key staff where possible in any decision making as this will foster an ownership attitude to the situation. The more staff acting like owners/shareholders, the better for your business.
- Be as positive as possible and continue to talk about the many opportunities that will exist for them when the company gets through these unprecedented times.
3/ Hold onto key customers and suppliers
- For key suppliers, they will remain loyal if you show loyalty to them by honouring your payment terms if possible. If this can’t be achieved, be as transparent and honest as possible on why you can’t meet your obligations. If you take the “no surprises” approach, they are more than likely to be understanding and provide you with relief or extended terms. It is unacceptable to NOT pay with no prior communications.
- Key customers need to receive high levels of communication and reassurance that you can continue to deliver the services and products they are paying you for; personalised phone calls rather than generic emails are the most effective communication technique in crisis situations.
- If customers request or need payment extensions, consider them and have an honest conversation as to why you can or can’t accommodate their request. Usually, there is some middle ground in these situations. You will gain a loyal customer for life if you show integrity and compassion in a crisis situation.
Chris Small and the nationwide team of specialists at ABC Business Sales plan to roll out a series of insightful and productive content pieces over the coming weeks and months to support the NZ business community.
Find out more about out free advisory services and register for a session with one of our trusted advisors here.