For some businesses it’s too late for survival.

If your sales have fallen off a cliff and customers have cancelled, postponed or are no longer there, then there is no easy solution.

All you can do is to try and delay ground zero (you run out of cash and have to close) for as long as possible. Do everything you can. You’ve spent all this time in business, you won’t go down without a fight. And it will get better.

But if you are under extreme stress then try and delay the inevitable by raising as much cash as you can by:

  • Reduce any on-going costs (subscriptions, staff benefits, any extras you can). It may not be good for those suppliers but this is your existence you’re saving
  • Get rid of any excess stock
  • Tap into the Government subsidies available
  • Sell any unused assets
  • Identify any customers not affected and focus on selling to them
  • Ask larger suppliers if you can delay any payments or part pay
  • Talk to your financial advisers/accountant if they have cash saving strategies you can adopt
  • Find out if your industry association has advice/networks or support to tap into
  • Seek legal advice if any decisions will impact on any contracts, obligations or business interruption

Each week there will be new announcements by Government and the private sector all seeking ways to keep you going. Keep an eye on these sites in particular:

Once you’ve swept the cupboard bare, see how long you have left and what actions you may be able to take.

Some of the impacts of the viral outbreak are indirect rather than obvious and it is worth taking the time to think hard about the range of risks you face and how you would handle them.

Supplier disruption

Many goods are either manufactured or assembled in other countries (China and Mexico are good examples) or rely on offshore componentry. Global logistics chains have also been disrupted, particularly to these countries but also as flight cancellations and border restrictions broaden, to other countries.

If you rely on key suppliers who source from offshore and there could be a disruption, then you need to start finding alternate local suppliers fast.

Social distancing

Government quarantine policies, self-isolation or people’s voluntary desire to minimize contact with other people can disrupt business staffing levels and change spending patterns.

Employees may need to stay home to isolate themselves or care for their children if schools and early childhood facilities get closed. People may increasingly prefer to stay at home, eat delivered food and watch Netflix rather than going out for dinner and a movie.

There will also be some businesses that benefit from the virus outbreak. Some will be providing goods or services that are sought after in the fight against the virus. Others will benefit from a refocusing of spending. And domestic producers that compete with imported product may see greater interest in the short term and, potentially, the longer term as businesses rethink supply chain risks.

Make sure you have clear policies for social distancing for staff and customers.

Understand the trends in your business

Changes in your business will be pretty obvious but it will still pay to track sales and revenue and dig deep into any unexplained decline.

The disruption to global shipping and airfreight may also affect delivery times from a range of countries, even if manufacturing itself isn’t disrupted.

  • Identify your critical suppliers and contact them to check they can continue to supply you
  • Explore options for key suppliers you can switch to if needed
  • Explore the feasibility of holding more inventory and finished goods to reduce the impact of any future disruption.

Plan ahead

To be fair it’s not that easy to plan when everything is changing so fast, but having a clear idea ahead of time of how to respond to various developments will aid rational decision-making in the heat of the moment and may help to get ahead of the curve.

Make or update contingency plans: most businesses (particularly large ones) will have made comprehensive contingency plans and have a good idea of how to respond. If you haven’t got a written contingency plan, it would be wise to put one together.

Some key actions to consider are

  • Document your key risks
  • Determine how would you respond to losing key customers even if only for a period
  • Know who your alternative customers are
  • Understand your health and safety obligations to your staff and have a plan for if one of your staff were to contract COVID-19
  • Plan for how you will manage employee staffing disruptions for example if school closures require parents to remain at home
  • Check with your industry body for advice, information and any engagement that is being made with government for assistance
  • Track the global geographic spread of coronavirus to check on the risks of global suppliers being directly affected
  • Seek help if needed: a number of businesses are already facing challenges and others are likely to. There is support out there to leverage
  • Talk to your trusted advisors to see what helpful suggestions they have and perspectives they are seeing from other clients
  • If you are facing or think you could face financial pressures, talk to your bank sooner rather than later.

Sooner usually leaves more options available. Otherwise-healthy businesses are being affected and simply need some support to get through until the impact of the virus reduces.

Look after yourself

Only those in business understand the pressure you’re under. If you do feel overwhelmed then seek help where you can. Your mental health is possibly the most important asset to protect and talking and sharing will help. You don’t need to rely on your own gut instinct or intuition to fix your current issues as we are all in unchartered waters.

Connect to your support network; your friends, family, other small business owners you know, banker, accountant, industry association, community groups and mental health support lines.

Finally, the worse-case scenario

If you do find that sales have ceased due to the virus and you’re facing disaster, then some options include:

  • Work out how long you have left. Is it weeks or months before your cash runs out? Put in place cost reduction steps which may include moving to a skeleton staff, re-negotiating any fixed costs like rent and cutting as much fat out of your operation as you can. This should extend how long you have to hope the virus ends soon and sales will start to lift
  • Do you have any business interruption insurance and does it cover disease? If yes then find out what financial relief this offers
  • Tap into any loans or extensions of finance or if you can postpone any costs that may buy you more time
  • Temporarily close and wait until things go back to normal. Your largest cost is likely to be staff and maybe you can hold onto key employees, but ultimately to save the business you may need to let everyone go, with the promise of re-employing them once sales bounce back. At this stage you’re aiming to protect the business
  • Close down and liquidate. All staff have to be let go, sell up everything and cancel any on-going agreements or subscriptions. If you can make a clean escape then it could be a viable option
  • Declaring bankruptcy. If the family home is on the line or you see no way out then you may be forced to walk away especially if you’re locked into long term monthly obligations you can’t cancel, can’t afford to pay and are personally liable for. This is a last resort, please seek legal advice and try and avoid this if at all possible.

Deep down decide if it’s worth fighting for survival. You will know how much effort and work you’ve put in so far and what other income opportunities you have. Being in a small business is both tough work and a privilege. Let’s keep it that way.