“Volatility is the new normal for small businesses, with a long recovery path ahead. But small business owners are also the most resilient people you’ll ever find. If anyone can cope with the challenges that lay ahead, they can,” he says.
Here, industry insiders provide some useful tips on preparing for 2021.
Call your bank early
Pick up the phone sooner rather than later if there’s trouble ahead. Leaving hard conversations only delays the inevitable, the general manager, business and corporate banking for Bank of Queensland, Greg Pink says.
He urged small businesses to ensure that financials are a true representation of what’s happening in your business.
“Frank and transparent banker and customer conversations have become far more enriched this year as lenders look for ways to help customers,” Pink says.
Shop around for finance
Spend time finding the right financial product to suit your cash flow requirements.
Bank of Queensland has taken learnings from customer relationships in the agricultural space, which has always had the peaks and troughs in its earnings that so many small businesses are now experiencing.
“Many of our agricultural customers use a line of credit facility, which we’ve extended to our small business customers looking to ride out the economic uncertainty,” Pink says.
Experts predict that economic volatility will continue into 2021, prompting calls for small businesses to accept that the “new normal” is here to stay.
“Don’t sit around and wait for things to go back to how they were, because that’s not what’s going to happen. Instead, look for ways to unbundle your business and hone in on the areas that are most profitable,” Spencer says.
Don’t postpone hard decisions
Whether it’s laying off staff, pivoting or accepting that you need government assistance to ride out the economic lows, don’t put off making the hard decisions, business strategist John Hagerty says.
Go through your profit and loss financials with a fine-tooth comb and reduce costs in your business where you can, he urged.
“Make the tough calls as early as you can, otherwise you’re going to end up paying for your hesitation down the track,” Hagerty says.
Understand your clients
Increase your dialogue with top tier clients, understand what they need at this time and consider how you can pivot your business towards new markets.
“There are lots of examples of small businesses thriving this year. It’s a matter of looking at what opportunities exist for you, and seizing these as fast as you can,” Hagerty says.
Lock payments in
One way to get cash flowing into your business faster is to lock in clients with contracts or service agreements. That way, you have guaranteed income on a recurring basis, Hagerty says.
This gives your business financial security and a degree of leverage with financial institutions should you need a loan at some stage, he adds.
Look for assistance
There are a number of grants and financial lifelines being offered by federal, state and local governments, so make sure you check you’re eligibility and apply for what you can.
Additional policies designed to help small businesses recover into next year are in the pipeline, so check again in a couple of months as the eligibility goalposts may have shifted.