Small business survival can be challenging at the best of times, but COVID-19 has introduced a lot more complications for so many business owners across the country.
Not only has business activity plunged since social distancing measures and operating restrictions were introduced, but confidence in the economy going forward has also tumbled to a record low.
Small businesses need to consider both short and long-term solutions to cover operating expenses during the coronavirus outbreak and search for ways to maintain a healthy business cashflow, at a time when many companies and consumers feel financially stretched.
Both federal and state governments are offering a range of stimulus and support packages however more traditional financing might need to be applied.
Unsure what is best for your business? Below are some ways to increase cash flow if your business is struggling during this time.
Cut back on business spending
Cost-cutting is a great place to start if your trying to free up cash. Complete a review of your balance sheet to see where you may be able to cut back on expenses.
Depending on your business type and how you are currently trading, this may include things like software, stationary supplies, training and events or put things like cleaning or photocopier support on hold if you have closed your physical office space. Remember, you can always reinstate these activities or costs once business picks up again.
Negotiate with suppliers and lenders
Depending on your contract and terms, you may be able to re-negotiate new payment terms with your existing suppliers or creditors. It’s important to acknowledge that skipping payments without explanation may damage your relationship with your suppliers and impede their ability to manage their own businesses.
Many lenders and credit card companies are waiving fees, deferring payments and offering other financial assistance to help businesses cope with the financial fallout of the coronavirus outbreak.
It’s important for entities to work together and comprise, in order to reach a mutual outcome for all parties.
Help your customers stay afloat
It costs five times more to attract a new customer then to retain an old one. That’s why when it comes to saving money and managing cashflow in the long run, it’s crucial to think about how you can keep loyal customers on board.
Ask yourself: which products or services are selling well? Which aren’t? What might you change about your products or services to help them sell better?
Look for ways to reshape your products and services to fit with changing consumer needs.
Help customers to remain engaged with you as a business and continue utilising your services but in a way that they can access.
If your business has been impacted by the pandemic, you may be eligible to receive government assistance.
Both federal and state governments are offering a range of stimulus for different industries and circumstances ranging from cash flow boosts, wage subsidies, rent relief and fee waivers that may support your businesses cash flow.
More information is available on the below stimulus measures that may be available for your business.
Instant Asset Write-Off
One of the best tax breaks for small to medium sized business is the instant asset write-off. This is a great way for businesses to acquire capital assets, obtain an immediate tax deduction and free up cash flow.
The instant asset write-off threshold has been temporarily raised from $30,000 all the way up to $150,000. Not only that, but businesses with annual turnover of up to $500 million, as opposed to the initial tally of $50 million, are now eligible for the write-off.
The scheme was due to revert back a $1,000 threshold as of 30th June 2020 but has now been extended until 31st Dec 2020 meaning there is still time to take advantage.
To find out if your business is eligible to benefit, Simply call 1300 4 Morris or email email@example.com and speak to our New Business Finance Managers David or Fiona who will be able to assist you. You can also find more information in the links below.
While many businesses aren’t confident in the economy, they feel more optimistic about their own ability to weather the effects of the downturn.
Although there is a lot of government stimulus available, not all businesses will qualify. Therefore, its best to not bank on this being your saving grace. It’s important to make decisions based on the knowns, or things within your control, rather than the unknowns.