5 Business Survival Tips

The aftermath of the global COVID-19 pandemic, has left significant changes for each country’s economy and on a global level. The cause of such massive disruption in established economies have included:

flight grounding;
vaccination mandating (for the workplace);
isolation requirements;
vast business closures (both temporary and permanent);
government stimulus packages;
the return of investment money back into Australia that would not normally be invested here; and
significant disruption to supply chains

This has resulted in a) a redistribution of wealth; and b) the requirement for your business to be creative and innovative on how to adjust in order to survive through these significant, unprecedented and most likely permanent changes to the economy.

This means it is time to batten down the hatches, in order to ride through the storm. We have put together five basic rules of business that can help put your business in a more robust position:

A very detailed budget and forecast is imperative, so that you know where you are and where you are going. You will need to perform a sensitivity analysis as well, meaning you will need to use several variables so that you know how your business will respond to each possible scenario. For example:
- If you have a mortgage or an equipment/infrastructure loan, try adjusting the interest rate to several different levels to determine how much your interest repayments could be, and if your business could cover them should the rates increase;
- Another example is reducing your income, by, say 20% to see what happens if demand for your products or services is affected. Or you could vary your cost base to see the effects.
Review all your direct and indirect costs to see where you could reduce these anywhere (including employee costs). Turn any costs from fixed into variable where possible.
If your business is holding any excess infrastructure or property, it may be better to try and sell as quickly as possible prior to the recessionary effects of the economy. Otherwise it is likely you will have to wait another three to five years to sell, when the economy starts its upward growth trajectory.
Like with COVID-19 lockdowns, looking for different ways to market or deliver your product or service will be necessary. Depending on whether or not you are offering luxury or necessity items will affect how much you can diversify your offerings.
Consider whether you can influence the structure of your business to a more vertical structure, so that relying on third parties is minimalised. Examples are:
- Looking at the possibility of acquiring a business that manufactures some or all of what you sell. If you offer services then look at a service that is required simultaneously with yours;
- Accounting firms are increasingly merging with law firms and financial planners, because their services are becoming so closely related