Australia is currently in a COVID-19 twilight zone with a combination of hibernation and a heavy dose of cash being injected to keep us alive while there is a liquidity/cash drought.
The good news for farmers is that this is a city drought not a country drought. Farmers look set for a good season.
So what happens when the cash drip stops and the walking wounded get kicked out of the emergency department onto the street?
It is likely the peak of the cash drought will affect most businesses in June 2021. The cash drought will be felt as government support is withdrawn and economic activity declines, due to a smaller economy.
The good news is that this is 12 months away so there is plenty of time to plan ahead. Here are some key steps every business should take:
- Get some strategic financial advice – This is a great opportunity to engage a CFO-type process to conduct a strategic financial review of your business. To review your business model, break it down and rebuild it better than ever. Most businesses can’t afford a full-time CFO so a Virtual CFO is a great option.
- Consider investing in efficiency initiatives or new product lines – This is a great opportunity to consider investing in efficiency or growth. There are concessional loans available from the federal and state governments. Is there a software system that could enable a cost saving or an improved customer experience? Is it time to bring some manufacturing back to Australia? A robot costs the same in any country.
- New projects – Often we shelve new ideas because we are too busy with the day to day. Use this time to get those projects moving. I have been meaning to start a business for the past 20 years and have finally done it.
These initiatives are likely to have a positive impact on the business valuation and your peace of mind. While the environment is fast changing, a flexible plan is a good start to coming out of this event with a stronger, better-positioned business.