Experts

Preparing your business for disruption

 FINANCE | JOSEPH ESSAY

WHEN the Covid-19 virus rocked the world in early 2020 for many it was a game changer, as entire industries were put into hibernation and businesses were forced to change their way of operating to survive.

And while prudent government support packages largely helped protect Australia from the economic toll that other countries experienced, recent fl oods and fi res and the return of state-based lockdowns have proven that risks to businesses are still ever present and you must be prepared with your own business continuity plan for when unexpected events disrupt your business.

HAVE A FINANCIAL PLAN

Disruption can come in many forms but in almost all cases your cashfl ow will be one of the fi rst areas where you feel the pain. Government support is not always applicable and even then, is unreliable and often inadequate.

To prepare for this you should be aiming to structure your fi nances such that you have an emergency fund of available cash that you can draw down on in the short term until other support arrives or your business recovers.

The amount will be diff erent for every business but usually three months of essential operating costs is a good buff er to keep on hand. The other practical cashfl ow musts include putting in place forward cash fl ow projections and proactively contacting your lenders and suppliers early in the piece explaining the situation and that you may be delayed in making payments.

If nothing else this signals that you are in control of the situation which will usually buy you a bit more leeway.

MANAGING AND ANTICIPATING THE RISK

There are also many other strategies you can employ to anticipate risks and make these disruptive events easier to manage when they do occur. One key strategy is ensuring you have off site backups for key fi nancial and business records.

Modern cloud-based storage and accounting systems make this easy to execute. You must also ensure you have enough of the right insurance in place to cover you against your biggest risks and protect your assets.

While income protection or business interruption are a must, I also advocate strongly for cyber protection insurance with this type of fraud becoming more sophisticated and harder for software to keep out.

Lastly, one of my favourite tools for managing risk is an internal risk register through which you can identify the specifi c risks most relevant to your business and have a plan for avoiding or better managing these when they do occur. As they say prevention is much better than any cure!

HOW FLEXIBLE IS YOUR OPERATION

Another must for businesses in protecting against disruption is ensuring your business operation is fl exible enough to move quickly if key assets and people are compromised.

Strategies to have in place include having staff setup with the equipment and know how to work from home, ensuring cross training of key roles and having a plan in place to move your fi xtures and stock in a hurry which will save you precious time when a disaster is looming.

One harder to execute but very important strategy is ensuring your trading is diversifi ed across diff erent industries, geographic and demographic sectors.

It also helps if you have diff erent channels to market i.e., online, email, telephone and face to face sales in case one of these channels becomes compromised.

CUT COSTS AND KNOW YOUR RIGHTS

When your business is suddenly hit by a disruptive event that shutters operations you must move quickly to control costs.

An obvious one is to cut all non-essential discretionary spending, but you should also contact key providers (rent, utilities, fi nancing companies etc.) and see what support they are willing to off er.

Temporary excess staffi ng can be the big concern for many businesses and there are options available in terms of temporarily standing down staff or enforced leave, but it is imperative you understand your legal rights and responsibilities in this respect.

For small business it can often pay to have an engagement with a HR specialist, such as the industry leading Employsure, to protect your business and your employees’ interests in these circumstances.

As marketplaces have opened so have many opportunities for small businesses, but it has also resulted in an increase in the risks involved in running a business and has turned a business continuity plan from a “nice to have” to a “must have”.

When your business is disrupted, the key is to move quickly and take a considered but decisive approach, with good fi nancial planning and early communication being at the bedrock of this.

Disclaimer: This is article provides general advice and is not intended to be tailored business, accounting or fi nancial advice. Advice may vary depending on your specifi c circumstances.

Joseph Essey is owner of Your Business Finance Manager. www.ybfmanager.com

Your world as you know it is over

 INFORMATION | MARIO BEKES

WE can argue and discuss how life, business and social interactions were in the pre-COVID world, however, none of these changes the fact that the world we know is over and we need to refocus our activity on positive things.

To enable us to continue to go about our daily lives and enjoy family, health and business, we now have to fully concentrate on things we can control. From a business perspective, it is about how we can assist our clients, peers, employees and contractors.

We all witnessed in pre-COVID world how many gurus and ‘prophets’ there were seeking to charge you to listen to their success stories. We should not be focusing our eff orts on them.

So, who am I? Who are you? You are true unsung business heroes, true disciples of success and above all, determined to be on the front foot of life and business. I am a businessman who in my early years experienced the horrors of war and how it eff ects people. It also proved to me that I was capable of creating my own destiny.

That old way of life and thinking is over, you don’t need prophets, gurus and high paid executives to tell you how to run your business. You now have the full authority and credibility to share your wisdom and knowledge to others on how to stay afl oat.

When you wake up in the morning, instead rushing to the internet and being fed bad news about the virus, crime or natural disasters, do yourself a favour.

Wake up and say to yourself, “Today will be a great day” followed by putting on the biggest smile and then ask yourself, “what do I truly want from life” – after all you may be the only person who will never lie to you!

Say hello to your family, ask them how they are. Say hello to your neighbours, whether you like them or not. Say hello, they will feel alive or perhaps they will tell you to FO, who knows.

Come into your offi ce, or have your team zoom call, and say hello to your peers and employees. Maybe buy them an occasional coff ee if you are together in person. Not because you are a charity but to show gratitude. Why are you doing this? To show respect, kindness and motivate your employees. They will appreciate it, trust me.

Reply to your emails, don’t keep your clients and suppliers waiting. Pick up the phone and call few clients and ask them how they are. They will welcome it. Don’t ask them for work, just smile and ask them how their day is.

Open that journal of yours with ideas, concepts and blueprints. Choose some to follow through. Sit next to employees and ask them what they are doing today and how you can help them. Then relax, you are already showing leadership qualities and displaying courage that no gurus can teach you.

Life is risky after all

Try to feed that starving feeling for business development inside of you through networking. Be targeted, chose whom you spend time with, as not all introductions are made equal.

Take the time to go to gym, see your GP to get a for blood exam and to check your blood pressure. Show up to our meetings feeling healthy. Repeat this action so often that it becomes a discipline. The healthy leader in you will project to clients that you are present, reliable and dedicated. Ask for and help instill this into your employees.

No one can promise you what your tomorrow will be like. Work on creating your own legacy and empire. Write books, diaries, blogs and share your wisdom or whatever you fancy, but do it so that others can learn from your mistakes.

Life is risky, after all, it is so risky that no one will live forever. Many of your old risk management processes are now more or less useless and you need to create new ones. Adapt to this crisis and the constantly changing situation.

Do not collect your information from social media and sensationalist websites, as these will side-track you. Instead use local newspapers, coff ee shops and conversations with real people. Do not rely on social media infl uencers and their ‘awesome’ tips.

Life is about living and for you to keep winning, you need to minimise strategic thinking. Instead, take a tactical approach by focusing on your local market and things you can control. You are clearly winning and when you win, your clients win, your employees get paid and everyone will see you as a person they can rely on.

Deliver services and goods that you know you can deliver using logistics that you can see and feel. That may sound obvious but when you challenge yourself, you may not be doing this.

While in combat, I was taught to use my senses and intuition along with my formal training, and business is all about what you can see, touch, smell, hear or taste. That’s what this new COVID business model is all about. Welcome to the new world.

Mario Bekes.