With small businesses among the hardest hit by the COVID-19 pandemic, many are starting to think about their next move and how to keep afloat financially during these uncertain times. Now is the perfect time to take a step back, rethink their strategy and adjust cashflow management to move forward with clarity in a post-pandemic world.
Business owners need to find ways to maximise their opportunities and better utilise resources. The recent budget announcement by the Australian Government included a $10 million investment in the development of new digital tools to help small businesses understand and reduce compliance costs.
As the Government rolls out these initiatives, there are still other considerations business owners can explore to get back on their feet. Here are my tips to vaccinate your business and prepare for the post-COVID world.
1. Be clear on your business plan and goals
To keep pace with the evolving business environment, small business owners must adapt to the new needs of their customers. Check in on your business plan, recognise who your customers are in the current climate and how their needs have shifted.
Ask yourself what solution can your business provide? From here, you can map out the road ahead with clarity to ensure the overall business strategy and goals align with satisfying your target market.
2. Know your numbers
Step back and make sure you have a clear sense of how your business is doing. Go back to last month, or a month that best represents your balance sheet and track all income.
Clearly note what payments are one-off, what’s recurring and what you can deduct. Remember that all hard costs should serve a purpose, and each expense should aim to keep you on track to achieve your broader business goals.
3. Optimise your cashflow
Once you understand your finances – optimise them!
Extra cash sitting around is unproductive and optimising your cashflow will place your business in a much more secure position. If you are using credit cards to manage cashflow, avoid slipping into the habit of late payments.
Collect revenues as early as you can – look taking upfront payments or offering shorter terms. On the flip side, delay payments as much as you can. Take advantage of terms offered by your suppliers (but also consider any early payment discounts) or perhaps utilise a financing solution that lets you delay repayments to suit your cashflow.
4. Invest in your business
If you still have cash lying around, put the money back into your business to maximise the money you’ve earned and fuel growth.
Investment is a great way to reinvigorate your business and reduce economic uncertainty by considering how to attract customers. Whether it’s an investment in a marketing push or new online platform, be sure this activity considers the broader market and aligns with your customers. When the market recovers, short-term savings options like term deposits or high interest savings accounts are a good option.
5. Know what financing options are available to you
We see business owners in the industry often turning to credit cards, overdrafts, supply financing, loans and accounting tools to stay afloat, however there are a variety of financing options available
Buy Now Pay Later (BNPL) solutions exist, designed to meet small and medium business owners’ flexible cashflow needs. Such solutions aim to remove the hoops business owners usually have to jump through to access finance as they invest and grow, such as arduous application processes, long decision timeframes and high interest. humm®pro helps optimise your cashflow.
By shifting your strategy with the evolving business environment and optimising cashflow management, SMEs are best positioned to move forward with clarity and confidence.