Australian businesses are set to endure several more weeks in lockdown and potentially many more months trading under restrictions of some form or another. Now is a great time to take stock of your business’s financial situation. You should carefully consider your revenue, expenses, and profitability. Have your finances changed significantly over the last month? Last 3 months? Last year? Ask yourself if your business could weather an extended economic lockdown. Once you’ve gained a clear picture of your business’s finances you should make according forecasts for your cash flow. Laying off staff should be your last resort. Try and cut costs during the COVID from other areas. Keep on reading to find out four ways that you can cut costs during the COVID.
1. Get rid of discretionary expenses
You should separate your expenses into three categories when doing your financial expenses. These are fixed expenses, variable expenses and periodical expenses. Look at all your expenses and figure out which ones are non-essential.
You need to be discerning. Expenses that don’t contribute to your business’s essential function should be scrapped. Research free options if you’re unsure. You can also go for cheaper alternative solutions. You may find that these options make more sense for you even after restrictions ease.
Other payments can be deferred or rescheduled. Banks being flexible regarding mortgage and loan repayments. You can also postpone scheduled maintenance or servicing to vehicles and machines.
2. Cut down on your fixed expenses
Many New Zealand businesses have had to slow down or even halt their production. Because of this you should reduce your fixed expenses to save money. A great place to start is your rent. Talk to your landlord and ask them if they can reduce your rent for you.
Major banks are offering payment deferrals. You can also reduce costs during the COVID by reassessing your business insurance. At www.bizcover.co.nz you can compare Business insurance packages to find the perfect one for your business. Find the right balance of cost and cover during lockdown.
3. Move your services to a pay per use model
Make sure that you are using a pay per use model wherever possible. For instance, pay for mobile data and internet bandwidth as you need it. If you rarely use a service, simply axe it. Adopt to cloud-based technologies like Windows 10 Azure virtual desktop which comes at an affordable azure windows virtual desktop pricing based on pay as per usage model. The key to long term business survival during a crisis is balancing the reduced sales with the minimum services required to continue servicing those clients.
4. Get extensions on your bills
Call up your suppliers and discuss your situation with them. Ask them if you can defer your payments for a few months, or if they can offer you a cheaper wait. If you’re unable to pay you need to speak up. Don’t wait until you cop an overdue notice. Suppliers are understanding in these difficult times. Many suppliers have already got solutions in place that they can offer to small business owners. Remember, it is in your supplier’s best interest to keep you onboard. They rely on your patronage to keep in business.
You need to forecast the next few months for your business as accurately and realistically as you can. Some businesses will be able to reopen sooner than others. That’s why it is a great idea to look into new ways to operate your business. You might want to trade online, produce different goods, or try out a different business model.