Things you can do to turn things around
There’s no doubt Covid caused a lot of business owners pain during 2020 and early 2021. But is it really as bad as you might think? Well, as with so many things, it depends.
New research by ScotPac has shown that 1 in 4 small businesses are expecting their revenue to decline over the next six months. And especially now that JobKeeper has been withdrawn, it’s likely that we’re going to begin to see the beginning of the end for what’s delightfully termed ‘zombie companies’.
What’s a zombie business you ask?
Essentially, it’s a business that’s not alive or dead in that it’s not turning over enough revenue to be financially viable, but maybe just enough not to completely keel over. And certainly Covid-19 helped that along, but truth be told, for quite a few businesses, Covid was probably only the straw that broke the camel’s back as they’d not really been doing so well in the lead up and then were able to prop themselves up with JobKeeper, changes to Insolvent trading legislation (which has now ended) designed to keep businesses going as long as they could to turn things around.
And it comes as no surprise that it’s mostly small businesses, particularly those in tourism, the arts, retail and hospitality, that are likely to be affected with SMEs facing greater uncertainty than their $5million+ counterparts.
Whilst it might seem reasonable that only 10% of Victorian businesses are forecasting growth and nearly 65% forecasting decline due to the length of their Covid shutdowns and interruptions, more concerning are the 10% of NSW businesses considering closing and 20% wanting to sell. However, this is balanced against Queensland’s (non-tourism) businesses who have gotten through Covid largely unscathed as have many businesses in WA, SA, NT – with the majority of business owners in those states expecting to increase revenue, if only a modest increase.
So where do you start if you’re not quite in ‘zombie’ territory but not in growth territory either?
First things first – make sure you’re aware of any outstanding liabilities, such as tax, super or wages. That’s something the ATO are going to be looking at pretty carefully over the coming year. If you think that might be an issue for you, it’s best to tackle that one head on with the ATO (hint: you might want to seek professional advice first). The ATO, at this point, are promising more of a gently, gently approach, especially around debt as they don’t want to destroy the businesses that the government tried so hard to keep going for the sake of the longer term economy. However, the ATO are beginning to resume their more regular activities around compliance and lodgement.
If you’ve got your liabilities covered, you might want to seek to really reengage with your customers. Look for ways to solve their problems, even if solving those problems might not immediately generate revenue. The fact that you’re putting yourself out there, will generate activity and conversation. And often in more general conversation, is when your customer might just realise you’re the person they need to help them with whatever it is that you do.
Next, put together offers to get old customers back in touch with you. Offer a checkup, check in, review, upgrade, etc. If you’re worried they might not like the offer, test it with them. Call a couple of good customers who loved what you did for them previously and ask if you can pick their brains and if your offer seems like something that might work for others. Take on board their feedback and then go back with round two revisions. You might be surprised to hear that they’ve been thinking about it since you mentioned it to them and need what you’re offering or know someone else who does.
Or if you’re one of those sectors that’s still very affected by Covid measures and you haven’t yet, try pivoting. Take what you do and turn it into something similar but different. We’ve seen a number of fashion businesses who traded in retail forever, turn their businesses into an online powerhouse – which also gave them more control over their product, their revenue and got them closer to their end customers. That’s just an example – what could you do?
If however, it feels like Covid really did you in and you’re not sure if you should sell or close, definitely seek professional advice. You might be surprised at what someone else, who’s got some arm’s length distance from your business can see, that maybe you can’t.
And that’s where we can help. You can contact us on 02 6023 1700 or drop us a note via the form below.