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COVID-19: Tips for businesses to survive

Posted by Ben Whittacker-Cook on 7/04/2020 12:00:00 PM

Andy Hamilton, Director at Icehouse Ventures and ex-CEO at The Icehouse, joins other leaders in sharing advice on business protection during COVID-19. This article first appeared on the New Zealand Herald website.

Business advice COVID

There hasn't been a more challenging time for business than now, with the future of thousands of small, medium and large businesses unknown.

Here, business experts and entrepreneurs share their best advice and practical tips to weather the lockdown restrictions and wider disruption caused by Covid-19.

| Get a handle on your cash flow

MYOB country manager Ingrid Cronin-Knight says it is important that businesses get a handle on their cash flow and the financial position that they are in. She recommends that an operator firstly calls all of the people that owes it money to find out if they can pay or when they can pay.

After this she recommends operators call all of the people that they owe money to find out what flexible terms and options you have. Based on that information, an owner then needs to put together a spreadsheet to get a steer on its cash position and forecasts.

"Who are your top 10 suppliers? Call them all and see what you can do with them," says Cronin-Knight.

"Ask the questions around how you can reduce the cost or defer payment terms."

| Apply for wage subsidy

She recommends that businesses apply for the Government's wage subsidy scheme for an initial injection of cash.

"I've spoken to businesses that have said it has been a massive sigh of relief - they have stopped crying and can then get into a positive state about how they can cushion the blow."

Cronin-Knight also recommends that operators call the bank to see what leeway can be given around finance terms.

If you can, look to change your operating premises to reduce overheads.

"The most important thing is getting a handle on your cash. At this point everyone will be turning off capital expenditure, so look at ways you can cut your overheads.".

| Cut ties early on

While it won't be easy, Cronin-Knight advises that businesses look inwards to see if they have the means to make it through the pandemic.

"If you can't model a way out of [the current climate] and if you can't see line of sight, I personally think it's better to call it quits early on. That will allow you to move forward into the next phase," she says.

"The good thing for businesses is everyone wants people to survive because insolvency is the last step, and it means [creditors] don't get paid, so suppliers are a lot more flexible on their payment terms at the moment than they have ever have been."

She advises that struggling businesses seek professional help before making the decision.  

| Seek help from mentor, adviser

"Advisers are good, because they can help you see the things that you haven't otherwise done. Before you jump straight to insolvency, if you do have a business adviser ... see if there are different ways to get through," Cronin-Knight says.

Andy Hamilton, founder of The Icehouse, recommends that owners find a mentor or adviser who has been through a recession in the past to help them through.

"Most people who have never been through a recession, they don't appreciate what you have to do to survive."

He says it is important that businesses ask for help and reach out to organisations such as the EMA, Manaaki and the local Chamber of Commerce and ask for help.

"Often, it's only when we have to explain the situation to other people, that's when it makes us think about what really need to do."

| Downsize the team

Even with the wage subsidy scheme that allows businesses to receive $585 per full-time employee and $350 per part-time, businesses will need to operate leaner to get through the pandemic, says Hamilton.

"You have to start with being the leanest, meanest that you can be to survive," he says.

"I don't like the idea of letting people go, but to survive, that's what we have to do."

In instances where staff numbers can not be reduced, Hamilton says wage reductions are the only option. Cronin-Knight agrees.

"We'd like to see more people employed, but if you can't see a cashflow projection where you can afford to meet your obligations, then that's your best [move]," she says.

"The first thing you need to do is cut new hires so you're not bringing in anyone new, then look at commission payments, then move to wage cuts or reducing staff to part time before you get to job losses."

| Assign projects during lockdown

Hamilton says the worst situations bring out the best in people and this will highlight which employees are crucial for the business and worthy in the long run.

"Now is the time to get busy and explore where you can go as a business," he says, adding that you can assign staff learning assignments of specific projects during the downtime.

This includes getting staff to upskill or participate in e-learning modules from home, or assigning staff to work on the back end of the website while the primary function of the business is on hold.

"If there's not that much revenue coming in, think about what else you can do."

Zac de Silva, founder of Business Changing, agrees. He says what you do over the next few weeks during lockdown will greatly impact the business' performance in the short to medium term.

Use this time to work on the business rather than in it, he says. "[Look] beyond the day to day things that needed to be done.

"'On the business' means putting time into things that will make your business more sustainable and successful in the future," de Silva says.

"Your team is likely your most valuable asset. Make the most of your team. If your team are able to work from home, outline what you expect from them during this time, including workload, output and hours, keeping in mind that they may have distractions at home.

"Determine some value-adding projects that they can do that will make your business stronger in the future, like upskilling, e-learning, working on back-end processes."

| Stay positive

A positive attitude can translate to a positive outlook. Hamilton says it is important business owners do not lose hope: "You have to have hope in this time. In times of crisis, most of us look in the headlights and freeze, and you can't do that - you've got to look away from the headlights and think about what you can do.

"It takes one person to go 'Come on we can do this'; that's really important."

| Improve your leadership

De Silva says use this time to work on your leadership and management style, and make sure you are looking after your staff beyond the realms of the workplace.

"During hard times, good to great leaders shine. You might not be Winston Churchill or Mother Teresa but this is your opportunity to shine as a leader in your business," he says.

"Personally hold yourself more accountable to deliver the 'perfect CEO/business owner/senior manager' performance and do the hard things first. Show guts. Your people will respect you for it."

Use the uncertainty as an opportunity to develop yourself and polish skills that will help you be better in business and in leadership.

owner founder business

| Think of alternative revenue streams

"We always say that when you are flourishing, put away your cash reserves so that you can meet your obligations for three months or six months, but if you haven't got those reserves in place then you do absolutely need to innovate," Cronin-Knight says.

Look to innovate within your business and how you operate.

"Who is an audience right now that you can supply your goods to? If you're not an essential service you can't do it at alert 4, but if we get to alert 3, then that's when you can look at what changes you can implement."

Eat My Lunch is an example of this, which has innovated to provide food and care packages for seniors.

While some non-essential businesses are turning to buy now, redeem later schemes, some are looking at crowdfunding as a way to get some cash into their hands.

Cronin-Knight warns against giving away equity during this time, but says it can't hurt if you are doing it as a way to provide goods at a later date.

"If you can provide services and then get paid for them through those vehicles then that's good, but if you're trying to trade equity and have people take an equity stake then usually you need to have good cashflow projections and forecasts."

| Get creative

Hamilton recommends businesses leverage goodwill and relationships with existing customers.

"If you've got people who bought from you in the past, understand why they buy from you. Often you will find that there are some customers that are raving fans of what you do - find out what it is that makes them a raving fan and think about how you can find more people like that," he says.

"Look to the people who already know you, look to the people who already enjoy what you do for them and either try to get them to buy more or go and find other people like them."

Photographers and event managers, who had no business at present, were using the lockdown to showcase their assets and photography, says Hamilton.

"If you're not an essential service, it can be a bit distasteful selling or promoting now, so build reputation," he says.

"When you have a contagion like this so many of us are in the same situation and I think that leads to people wanting to help. Look to new and different places and ask."

For more business ownership and leadership advice, check out more of our blogs.  

Visit The Icehouse's dedicated resource for businesses impacted by COVID-19.

Topics: News & Events, Leadership, Business Succession, Business Strategy & Planning, Growth, Coronavirus, Andy Hamilton

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