The end of lockdown is in sight, and we can’t wait to get back into restaurants, shops and extend our hospitality at home. But for small business, there are a lot of things to consider as you get your doors ready to open.
Obviously, the industry you’re in will greatly impact the preparations you need to make. Some of us won’t experience any change as we have worked virtually throughout the lockdown but for industries such as hospitality, retail, health and fitness, the way you used to run your business may have to change especially when it comes to cashflow, payroll and working capital.
The key for any business getting ready is access to working capital – that is, having cash available to fund your operations and especially if you were a business that had to throw out perishables back in June and are starting from scratch now.
If you don’t have the luxury of a nest egg to cushion times like this, what are all of your options for working capital? If you’ve managed to save the Jobsaver relief that could help you out, but this has likely gone towards rent and payroll. A line of credit from your bank or an overdraft is ideal for times like this. Otherwise, you may be considering credit cards (never a good idea if you can help it!).
An alternative option is accessing other loans like the SME Recovery Loan scheme. This is where the Federal government underwrites the loans provided by both traditional lenders e.g. the big four banks, and other mainstream lenders. However, whilst the risk for the lender is mitigated, they are still making applicants jump through the qualification hoops, so it may not be a quick or easy process. There are other lenders in the Fintech space who have a much more straightforward application process and are targeted to small business.
With the borders still shut both between states and internationally, we have a reduced pool of people for vacant jobs. This has been felt the most in hospitality.
Businesses have let people go and they are moving around. How easy will it be to attract and retain a team to service your business? You may need to pay an increased wage or salary to staff. Once you have your team back in place, and hopefully fully trained up, then you need to plan for when you pay them. When is your next pay cycle? It may be worth your while to look at when you usually pay people and see if you can change that slightly to later in the week, for example, to ensure you have the funds from your sales to pay them.
Have you got your COVID-safe plan in place and updated for all the latest changes? Check that you understand your obligations under the new rules – who is going to check that your customers are fully vaccinated and entitled to be out and about? What is the plan if someone decides they don’t want to leave if asked?
We have just finished the September quarter and that means that the quarterly BAS is due at the end of this month. Making a plan like a cashflow forecast can help you to capture these items that are on the horizon. Knowing what you will have to pay is half the battle.
In planning your opening, are you thinking about how you can maximise your cashflow within the rules? This could be limiting customers to a two-hour booking so you can turn your tables over quicker. Is making a payment plan with the ATO an option for you for meeting that payment? If you don’t have a plan already, it’s a great way of managing through tough times.