Communication is key in face of COVID-19 March 2020
Businesses are having to make tough decisions, but there are options out there to help, a specialist business advisor has told The Antidote podcast.
Kevin Han, senior analyst at Nash Advisory, a Melbourne-based business support and corporate advisory firm said he has actively been advising privately owned companies including breweries and distilleries as they confront the current crisis.
“What we’ve found challenging over the last three weeks is that a lot of our clients are coming to us in a tough position because they’ve got to make some really challenging decisions around staffing, production, and what they need to do with their business,” he said.
Han said many directors, owners, managers and staff had invested time and money in their businesses and navigating the uncertainty caused by COVID-19 was an unprecedented challenge.
“What we’re fielding in terms of calls from our clients is really about business fundamentals.
“Cash is king at this point, how do we manage to pay our staff? How do we manage to pay our rent? What are the best levers that we can pull to get us through what could be a couple weeks, a couple months, or potentially longer?” Han said.
Listen to the full interview
Han explained that well-established companies are being forced back into the uncertainty of the startup phase, focusing heavily on cash flows.
“You really need to keep an eye on where the cash is coming in and where the cash is going out. And it’s about speaking to each of their individual suppliers and understanding which ones they’ve got a good relationship with and [with whom] they can stretch those credit terms.”
He said that the team at Nash were negotiating with their client’s banks, talking to major suppliers who may have capacity to give a bit of leeway on paying bills.
“On the other side is looking at where their revenues coming in and potentially chasing those late invoices or bills that they haven’t been paid for a while that they just thought, that’ll be fine, we’ll get it next month.
“But really getting on the front foot and trying to get that revenue in the door as quickly as possible.”
However he acknowledged that some businesses weren’t immediately set up for a move to online sales or other alternative revenue streams.
Han explained that if that is the case, government stimulus packages, which change day by day, are worth looking into.
“[Each state has its own package] so it’s making sure that, when we’re talking with each of the individual businesses, that they know what’s available, what they need to put forward, and what’s there and how quickly they can respond,” he said.
Queensland opened applications for its$500 million stimulus package, whilst the Victorian Government has alsowaived liquor licence and payroll tax, with measures at federal, state and local level changing regularly.
“It’s about preparing the business and saying this is what you need to prepare, you need to have these documents ready to go and you can access this level of funding to help guide you through the next few months.
“And that’s a way for them to keep the doors open, keep their staff on, and then hopefully trade through to the point where things start to open up again.”
Han said that communication was massively important, in understanding your own position and that of your customers, suppliers and staff.
“Number one… talk to your landlord, they will be the most flexible and you’ll have the best luck. And then the second one is to talk to your bank, and then the third one might be to talk to one of your key suppliers who has been known to extend credit terms,” he said.
He explained that the big four banks are inclined to be very accommodating during this period, as they recognise that businesses, many of which they have long standing relationships with, are going through a challenging time.
“If you’ve got bank managers or branch managers that you’ve got good relationships with, it’s as simple as picking up the phone and talking to them. They might not be able to help you right now, but they’ll be able to guide you in the right direction.”
It’s important to keep in mind staff, and keep communicating with them as to where the business is going and what your strategy is.
“You really just want to make sure that you’re being as communicative as possible with your staff,” Han said.
“At the end of the day your staff are the most important part of any business, so you want to make sure that anything you’re doing, you’re trying to keep them as up to date as possible and manage their expectations, manage their stress levels, and keep everyone informed.”
But if things are looking dark, then there are still other options.
“If you’re really at that brink where you don’t know what’s going to happen, we’re in a fortunate position where the Federal Government’s relaxed some of the regulatory constraints around what you can and can’t do as a company director, so really it’s just a matter of navigating, how do you get through the next couple of weeks, next month?
“One other option we have explored with our clients is looking at raising funds from investors to support them through these next few months. Again, it is an important decision to make but one which often needs to be made.
“What are your options, and laying them out on the table, and making quick decisions,” Han said.
“You want to make sure you’re talking to the right people, whether it’s your accountant or whether it’s a lawyer or whether it’s business advisors like us, making sure you get a cross section of advice so that you can make a well informed decision.”