Coronavirus is at the center of a media frenzy at the moment. It seems like every news outlet is void of any story that doesn’t center around Coronavirus. Absolutely, it is a serious problem due to the limiations in the healthcare system should the coronavirus spiral out of control. As of March 16 there are 298 confirmed cases across Australia with 134 currently in NSW as per the department of health’s current figures.
How much of the media hype is justified remains to be seen.
As the government sets precautionary measures to try and flatten the curve of coronavirus cases, the country also faces the serious threat of returning to a devastated economy. For many sole traders and small businesses, the problem is real. The Australian construction industry employ’s over 1.2 million people and our country relies so heavily on it to flourish. So how can Tradies ensure their businesses make it through the pandemic.
Cash is King
Cash flow is the number one biggest pressure on small businesses in any economy. A good general principle is to look at stockpiling 3 months worth of operating expenses. Unfortunately, this is easier said than done particularly in a situation that has popped up out of nowhere.
You should be taking the opportunity now to call on any invoices that you are owed by clients. Clear your debtors book as best you can.
If your quite, why not try and pick up some quick jobs over the next week with a sale on your services. It’s not your usual margins, but it’s cash in the door and cash is king.
Always run lean. This is a great opportunity to build in some good cost cutting measures.
Take full advantage of your suppliers payment terms. Don’t pay a bill today if it’s not due for another 30 days. The cash is better in your account for another 29 days that it is in someone else’s. However, don’t avoid your debt obligations. At all costs avoid hurting your credit score negatively by ignoring repayments on debt.
If cash is tight, call your lender and ask for a grace period. Lenders need your business to survive just as much as you need it to.
Avoid new finance loans on vehicles or machinery for workers. New debt obligations right now is not ideal unless it’s necessary. Run month to month rentals which give you the option of handing them back no more to pay.
Australian businesses face a tough couple of months should the country face lock down periods. But we are all in this together. Don’t be afraid to reach out to your accountant or close friends and family for advice and help.