TIP ONE – CONTINUE TO OPERATE
It is essential to communicate to staff that the national lockdown is not a holiday and that the business will continue to operate. It is a time to think ‘out the box’ and find creative ways to continue operating. If you can, set up your staff at their homes with laptops, WIFI, and mobile devices to continue working. Once this is in place below are some tools that the business can use to assist with remote working:
- Microsoft Teams, Zoom, or Skype to have staff and client meetings
- Dropbox and GoogleDrive for file sharing
- Remo and GoToWebinar for online events
- Facebook, LinkedIn, and Instagram for Online networking
TIP TWO – REVIEW & UPDATE YOUR FINANCIAL STATEMENTS
In difficult times like these, to make the best possible decisions, you need access to accurate and up-to-date financials that give a clear picture of the financial state of your business. Therefore, we recommend that you bring your business financials up-to-date. Also, list the possible financial impacts of COVID-19 on your business, quantify these impacts, and develop mitigation strategies to minimise the risk. Through this process, it is crucial to be transparent with your staff, key customers, and key suppliers as transparency builds trust, and we are all in this together. You will likely see the most significant impacts on your business in the following areas:
- Sales – A drop in consumer spending and economic activity is likely to have a significant impact on sales within your business. It is important to start identifying additional sales strategies to protect your business, i.e., further building an online presence.
- Staff availability – the national lockdown will restrict the movement of your workforce, which can affect their productivity, especially if there are limitations for them to work from home.
- Supply chain – Both local and international supply chains will be affected as borders remain closed, and domestic supply chains restricted.
- Finance – The financial risk is more significant for businesses with unstable cash flows and low cash reserves.
TIP THEE – RE-DO YOUR BUDGETS WITH NEW ASSUMPTIONS
It is almost certain that the previous assumptions used to produce your budgets are no longer relevant because of the COVID-19 crisis. We recommend that you work closely with your finance team or accountant to list the possible financial impacts of COVID-19 and incorporate them into your budgets. It is important that during this exercise, you assume the worst-case scenario, such as a 60 to 80 percent decline in sales over the next three months or a key supplier not being able to deliver. Although this may be a painful exercise, it will help you manage cashflows effectively during this crisis.
TIP FOUR: CREDITORS MANAGEMENT
The options to manage your creditors may be limited as suppliers are also feeling the knock-on effects of the COVID-19 crisis. During this time, it is important to keep communicating with your suppliers and financial institutions regularly. As mentioned before, being transparent from the start can help negotiations with creditors, and they may be in a position to help in some way. Below are some options that the business can pursue:
- Contact your suppliers and seek payment extensions, even if these are temporary
- Contact your financial institution to find out what measures they have put in place to help their clients.
- Review supplier contracts and delay and/or cancel orders where possible.
- Contact your landlord and request payment extensions or possible rent reductions during the lockdown period. In addition, use the current situation as an opportunity to review and negotiate the terms of your lease.
TIP FIVE – INVEST IN DIGITAL PLATFORMS AND ONLINE SALES
We are at the beginning of the fourth industrial revolution with technologies emerging that are affecting our daily lives and the way we do business. A crucial part of preparing for the crisis is to investigate different digital platforms to see which one is best suited to sell your products or services online. At Siyakha, we have already started investing in digital platforms, which will transform the way we do business moving forward. Recent data from markets already impacted by the virus shows that customers are likely to stay home (whether at the instructions of authorities or by choice), and as a result, purchase more online.
For service orientated businesses (accountants, lawyers, consultants, etc.), a digital strategy would reduce the need for face to face contact. As highlighted above, there are various tools to facilitate remote meetings and interactions. A digital strategy may also have long term cost benefits as it will limit the need for office space and increase productivity if managed correctly.
TIP SIX: SEEK FINANCIAL ASSISTANCE FILL CASHFLOW SHORTFALLS
President Cyril Ramaphosa announced various measures that the government is implementing to cushion the already ailing South African economy against the economic shocks of the COVID-19 crisis. These measures include tax subsidies for small businesses and individuals, lower contributions to the Unemployment Insurance Fund (UIF), help for businesses that are in debt, and a relief fund for businesses that may have their operations affected by the virus. In addition, the private sector and financial institutions have also announced measures to help businesses during the COVID-19 crisis. We recommend that each business do its research on the funding options available to them and apply in line with the criteria specified. Following the above tips, it will be essential to have up to date financials and budgets in place before submitting your application.
TIP SEVEN – DO A REALITY CHECK ON YOUR BUSINESS
And finally, we recommend that every business use the COVID-19 crisis as an opportunity to reflect on your business, how it was run in the past, and how you would like it to run post the crisis. Use this time as an opportunity for introspection by asking yourself the following questions:
- Were you happy with the current performance of your business before the COVID-19 crisis?
- Were you making the profit you wanted?
- Do you like being an entrepreneur? Why?
- Was there adequate cash flow in the business prior to the crisis?
- Are you achieving the desired ROI from your business?
- Are you prepared for the personal and financial demands that business recovery will place on you?
- Can you afford the keep the business afloat during the COVID-19 crisis?
- What opportunities can you identify for your business following the crisis?