Tips to Help your Business after Jobkeeper
With the winding down of the lockdowns, many businesses will have to take a hard look at their business financial affairs to decide whether they can continue to employ their current workforce or are even able to operate based on their expected revenue.
Here are 4 tips for continuing to manage your business:
1) Cashflow Planning for multiple scenarios
Business owners should work closely with their accountants to plan for their future cashflow.
My suggestion is to prepare multiple scenarios to capture different outcomes of your business performance over the next 12 months. What happens to your business if your revenue drops by 20%, 30% or even 40%? Can your business survive if you cut your staff by 20%, 30%, or 50%. What happens if some of your customers go bust or can’t afford to pay what they owe you etc..
The more Cashflow scenarios you prepare yourself, the clearer picture of your business Cashflow in the next 12 months you will have.
2) Take stock of your business financials
Take stock of your current financials and workforce situation. For some businesses, reducing your business wages is necessary to be able to stay afloat. If you have to go down that path, then carefully consider how, when and which roles need to be reduced or cut. It is important not to reduce or cut your key staff who have the skill sets, knowledge, and talents that are critical for your business.
Alternatively, reallocate your team’s working hours to do more productive work for your business like sales, business development and customer services and leave non-productive tasks like bookkeeping and data entry jobs to a back office bookkeeping firm.
Working closely with your accountant/bookkeeper to restructure and streamline your business operation by utilising effective sales, accounting, payroll, and inventory software to manage your revenue, employee time sheets, and stock level.
3) Understand your profitability and monitor your business performance
It is important to understand your profit margin and cost structures as only a portion of your revenue will convert into net profit. Because if you don’t, more sales could potentially send you and your business to the wall.
For example,
To be able to win jobs, some businesses have been willing to reduce their price just to win jobs and keep the business running with the hope that the economy will bounce back and their business will be back to its glory days. Unfortunately, by reducing their price, they have inadvertently lost not only their profit but also their money by working on the jobs that lose money. Sadly, It is not long before they realise there is no cash in the business to pay wages, suppliers and tax even though they are still very busy with a long list of job orders.
Work with your accountant to find out what your break even point is, or even better, your pricing structure for your products or services and keep monitoring it to make sure you are not running your business into the ground.
4) Access capital and refinance to strengthen your business Cashflow
While cutting costs and business restructuring are important to your business Cashflow, being able to access more affordable finance options is another way to seek more capital funding and competitive repayment rates for your debt commitment.
Work with your accountant and a business finance broker to seek better finance options for your business or home loans.
Contact us here if you need to explore your finance options for your business. Our finance team is working closely with our accounting team to help achieve the best solutions for our clients.
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