Corona Crisis - Finding The Way Forward
The outbreak of COVID-19 has plunged many businesses into challenging and unprecedented times.
In such times, negativity and fear can be the order of the day and it is difficult to look forward and be optimistic about the future. In the depth of any crisis, upsides can be difficult to find and it is very easy to become overwhelmed by all the negatives.
Many commentators have equated the current COVID-19 crisis with a wartime scenario. This may be a fair comparison given the upheaval this pandemic has brought to otherwise stable societies and economies around the world. Winston Churchill has been attributed with saying “never waste a good crisis” and although the word ‘good’ is confronting in this context, the message more broadly is to always make the best of a bad situation.
The value of strong leadership and sound business advice is never greater than in times of crisis. With these thoughts in mind it is worthwhile turning our attention to what actions businesses can be taking now to mitigate the downsides of this crisis and position themselves to maximise the upsides of recovery.
- Access government incentives – Both commonwealth and state governments have announced a broad range of stimulus packages designed to assist individual businesses and cushion the national economy. It is imperative that every business takes time now to identify and obtain access to all incentives they are eligible to receive. Many of the incentive packages are extremely generous and will undoubtedly save countless businesses from financial failure. Support packages range from direct cash payments and wage subsidies to long-term, low interest loans. Accounting professionals are ideally positioned to help businesses assess their eligibility and facilitate access to most of these incentives. Active engagement with your accountant is absolutely critical during this time.
- Negotiate payments with ATO and other government departments – Commonwealth, state and local government departments are currently very accommodating in their support for businesses. Payment deferrals and cash refunds are common ways many government departments have chosen to assist businesses. It is worthwhile being in direct contact with these departments as early as possible before payment of any government fees and charges become due.
- Focus on improving systems and processes – For those businesses unfortunate enough to operate in industries severely affected by the COVID-19 crisis, now may be an ideal time to work on your internal business systems and processes. Many small and medium sized businesses are suffering severe but temporary losses of revenue will find themselves eligible to receive JobKeeper payments. In these circumstances consideration should be given to re-engaging and re-deploying staff to work on the business rather than in it. Careful thought needs to be given to identifying tasks and projects that might benefit the business in the longer term, once it returns to normal operations. There may never be a better time to undertake all those projects you’ve wanted your team to work on but could never spare the time.
- Build goodwill with employees and customers – Taking care of your employees and customers in times of crisis will build the intangible value of your business, ready for when the good times return. Quality employees are the backbone of many great businesses and how you treat them during difficult times is often indicative of how they will treat you in better times. It is often the little things that count and for good employees it is never all about the money. Similarly with customers, now is the time to reach out and build stronger and more personal relationships. We are all in this together and helping each other get through this is the best way forward. Sending messages of support and being in regular contact with customers may not generate any revenue during the depths of a crisis but it will stand you in good stead when trading conditions improve.
- IT and technology – For many businesses, this crisis has provided the clearest possible demonstration of why it is so important for modern businesses to invest in technology. Despite what many people may have felt before this crisis, technology can be our saviour as it provides businesses with capabilities and options many people would not have thought possible. It is likely that post-crisis, many of these ‘new’ ways of working will continue into the future and become the norm.
- New products, service lines and delivery methods – Necessity is said to be the mother of invention and for many businesses, now is undoubtedly a time of great need. It has not been uncommon throughout this crisis to see businesses rising to the challenge by modifying their products and services or simply the manner they are delivered to customers. Creativity and innovation are often born in times of crisis and many businesses are taking a hard look at their traditional business models and taking steps to reinvent themselves.
- Supply chain diversification – One of the key takeaways from this crisis is a reinforcement of the importance of strong and diversified product supply chains. The global trend towards centralisation and concentration of supply has been a developing risk for some time and has been put in the spotlight during this crisis. It is likely that many businesses will look to actively address this issue during the mature stages of recovery. This in itself can create new opportunities for businesses to compete in markets which were previously closed or otherwise heavily driven by factors of price alone.
- Restructuring – Many successful businesses find themselves in a position where they have outgrown their existing structure or they are structured poorly from a risk mitigation perspective. There are currently several temporary measures in place to protect business operators as they continue to trade on through this crisis. Now may be the time to take a step back, critically evaluate your overall business structure and get your house in order. Business owners concerned about their structure and their personal or business risk profile should act quickly and seek specialist advice from an business recovery specialist.
The economic fallout of the COVID-19 health crisis has already had a wide-ranging and devastating effect on many businesses throughout Australia and the world. Whilst the full impact may not be known or felt for some time, it is likely that very few businesses will escape completely unscathed.
Whilst a downturn is an inevitable and unavoidable reality for most, there are also opportunities available to minimise the impact and possibly emerge from the immediate crisis with a better and stronger business.