AN ACCOUNTANT'S ADVICE ON HOW YOU CAN PROTECT YOUR SMALL BUSINESS FROM CORONAVIRUS

Small businesses need to have a plan to deal with the fallout from the virus which includes a drop in customer and sales numbers, disruption to supply chains and, ultimately, cash flow shortages.

With that in mind, here are 10 tips to manage the risks of the virus to your business:

1. Understand your supply chains

Many business owners may not realize that their product or service relies on parts or components from China, so understanding your supply chain is a critical first step.

2. Explore alternative supply chains

If your business relies on a supplier from an affected region in China, now is the time to seek alternative suppliers

3. Develop a contingency plan

Have a plan to deal with disruptions to the supply of your products and services. You may need to scale back production for some parts and stock.  Rethink your marketing strategy and how you can change customer behavior until the crisis passes.

4. Review cash flow budgets

You need to know in advance what impact a slowdown will have on cash flow. For example, review and adjust your cash flow forecasts to determine what affect a reduction in sales will have on your ability to pay suppliers and repay debt –which can be used for this purpose should you not already have online accounting software that can handle this for you.

5. Timely financial reporting

Ensure that your financials are kept up-to-date so that you monitor profitability, stock levels, and debtors and creditors balances on a timely basis.

6. Communicate with all key stakeholders

Refinance any Debt you have at record low interest rates. Timely and honest communication with your customers and suppliers is important. Customers need to be made aware of any issues with the delivery of your products and services and what contingency plans you have in place.

Renegotiate payment terms with suppliers if necessary and talk to your bank if you are unable to meet your loan commitments.  Review your debtors and, if necessary, offer discounts for early payment.

7. Review business continuity insurance

Check with your broker or insurance company if you can make a claim on your business continuity policy for any financial losses suffered.

8. Train staff

In case of prolonged staff absences, cross-train your key staff so that your business can continue to function at all times.

9. Slash overheads

Look at all the costs of your business and reduce discretionary and non-essential expenses.

Fixed costs such as wages, rent, utilities, financing costs and tax liabilities are not affected by a decline in sales and need to be properly managed.

10. Seek professional advice today

It’s very important for small businesses already impacted, or likely to be impacted by the coronavirus, to seek timely professional advice – don’t sit back and hope this will all go away soon.

Author: Gene Marks, founder of The Marks Group, a small-business consulting firm.