Small businesses are doing it really tough out there and need all the help they can get. Johann Kim, founder of retailer Pigeonhole, has seen his sales drop significantly since mid-February.
There are a few things that he’s been doing to try and keep his head above water. Here he shares some practical tips that may help some of you navigate through this challenging time.
1. Call your bank's hardship line. They can put a halt on your mortgage, credit card and loan repayments. Some banks may have a dedicated hotline due to coronavirus. Call them. Now. Stop the cash going out of your account as you need that to run your business.
2. Call the ATO. If you are on a payment plan or have ATO debt they can defer it until June and will also stop interest accruing over this time. If by June it's not better, call them again. Call 1800 806 218 for corona affected businesses. Hot tip with the ATO, if you don't get somewhere with the person you are speaking with, call again. You might get a more sympathetic person the next time and that will make all the difference.
3. Renegotiate your rent with your landlord. I've already had rents come down 75 per cent in response to coronavirus in the last few days, but even this is not enough in some cases. I would push as hard as you can for FREE rent until things start to normalise. It's better that you are there and trading and paying nothing for a few months and survive than for you to go under and the property end up vacant. There is no harm in asking.
The best way to get rent concessions from my experience is to give them actual data and figures. Show them the decrease in turnover day upon day or month to month. Compare the figures to previous years as a point of reference or attach a P&L to show that your business is now sustaining losses.
Be clear about what you want and be persistent. Everything is always up for negotiation.
4. Renegotiate your supply terms. Everyone is in the same boat and your suppliers want you to stay in business. They might write off some debt, or extend the payment term out for several more months, or you can suggest a payment plan. Be pragmatic about it, pick up the phone and see what can be done so you can both weather the storm.
5. Stop every non-essential payment from going out. Apply for hardship on your credit card, your car repayments, phone bills, everything.
6. Cut down on wages. Communication is key. Change your trading hours, remove the cross-overs, try to be as equitable as you can with hours and keep morale as high as possible. Maybe consider rallying your team together to collectively take a hit to their hours for the good of everyone. Without our teams' support during this crisis we won't survive.
7. Shift your business model. We have to find a way to adapt our products and services to our new paradigm. Can you bring your business, product, service to the customer if they can no longer come to you? Is there one thing you can focus on during this time, even if it's not the most lucrative, just something to keep cash flow going?
8. Consider all options. Talk to your accountant, talk to a liquidation specialist, talk to a business broker. Work out your options whilst you have some still. Just choose your advisers wisely.
9. Don't panic. Phone a friend. Look after your mental health. Try to get some sleep. Go for a swim or a run. Don't let fear take over your decision making. Now more than ever we need to have emotional and mental clarity.
Finally, if you have a friend that runs a small business that is affected by what's going on right now, here are a few things you can do to help them out.
1. Send them encouraging messages or give them a call. It's really scary and lonely out there! It really is so important to know that others actually care.
2. If you are one of the lucky ones with a stable income then actually use their service, buy their product, recommend it to others, do what you can to keep them in business. If businesses are temporarily closed then buy gift vouchers to spend when their businesses (hopefully, with your help) reopen. We need you now more than ever.
3. If you can help with your time, skills or knowledge then offer it for free. Isn't that what friends are for? It's times like this that we need our communities around us supporting us. It's not a time to try to profit one another but help each other wherever we can.