Given the last 12 months, it’s not unreasonable that many businesses might consider bunkering down and waiting until it all blows over. This mentality tends to involve slashing costs and reducing employees, but is this the best way to keep your business afloat?
A more workable solution is to manage your costs with an eye to the future. This involves truly understanding your business and the resources you have available.
Retain your core staff
When times are hard and cashflow is dropping, severely cutting your costs by slashing your workforce is a very tempting, but also an aggressive and potentially unworkable solution. A much smarter approach is to retain your core staff so that your company’s basic operations can continue unchanged. This keeps your business afloat, maintains the day to day operations, whilst still cutting costs.
A balanced model is to make sure that 60% of your operations are conducted by your core staff with the remaining 40% conducted by itinerant workers. This gives you the flexibility to hire staff on an as-needed basis without having to commit to hiring additional permanent employees who will drain your resources. If you continue with this approach as your business gets back on its feet, you will always retain this flexibility if the tough times return at some point in the future.
Leverage government initiatives
If your business is on the edge and you can’t see a way forward, make sure that you leverage every initiative that the government is offering. This includes finding out how the latest changes to JobKeeper will affect your business, what support is offered for apprenticeships, relief for commercial tenants, instant asset write-offs and much more. You can find out what’s available on the government website. A point to note here is that you might not want to hire additional staff just because the government gives you an incentive. Unless it’s right for your business growth at the moment, it may stretch your resources too far in the long run.
Review how you manage your physical assets
If your business has accumulated physical assets over the past few years, it’s now time to review these purchases. If they are not completely necessary to your business operations, are they a drain on your resources? Will selling or leasing them be a better option? What about repurposing them to help your business move forward? Any reduction in outgoings may help you to weather the storm and give you the resources you need to get your operations back up and running.
Review your insurance policies, cover and premiums
When times are tough, companies want to cut costs and one of the areas where they could see an instant result is their insurance premiums. However, cutting your insurance premiums completely can leave you vulnerable, being liable should anything happen to your business. Our recommendation is instead, to review your current policies, cover and premiums with your insurance adviser who can ensure you maintain adequate cover, while advising of cost saving options. Together, you can ensure that your business continues to operate safely, with the right type of insurance coverage.
For help reviewing your business’ changing needs, talk to a professional insurance adviser today.
General Advice Warning
The information provided is to be regarded as general advice. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.