5 ways to prepare your business for the end of JobKeeper
At a glance
Here’s a snapshot of the advice from our interviewees:
- Forecast cash flow three months in advance.
- Understand how your major clients and suppliers are performing.
- Review your marketing plans to ensure they’re still relevant.
- Optimise your accounts receivable so you’re paid as quickly as possible.
- Make the most of every government subsidy and stimulus.
When the Federal Government outlined restrictions to combat the spread of COVID-19 a year ago, Louise Lashlie closed her JUMP! Swim School in Newcastle for four months. JobKeeper was vital in ensuring she could pay her employees and keep the business afloat.
“It would have been tough to get through without it, but I did have good savings,” she says, adding that four of her seven employees were eligible to receive the payment. “It kept me sane, knowing that the money was coming in to help me keep most of my staff.”
When the scheme was extended in September 2020 for eligible businesses, Lashlie’s turnover had returned to pre-COVID levels, so she no longer needed the support. But, for the many small businesses that have not yet recovered and continue to rely on the payments, the cut-off date of 28 March 2021 is looming.
Peter Knight, Director of Knight Partners, which provides accounting and advisory services to small businesses and franchises, describes JobKeeper as a ‘lifeline’ for many of his clients over the past year.
He recommends five ways to prepare your business for the end of JobKeeper.
1. Forecast cash flow
A strong focus on cash management and liquidity is vital if your business is to remain viable.
“Cash flow forecasts are a business fundamental and a survival technique,” says Knight. “You need to be constantly scanning the horizon to see what’s coming, and factor in all your overheads and outgoings.”
Account for all incomings, such as sales or investor funding, and all outgoings, including payment for stock, salaries, rent and other operating expenses, as well as looking for ways to trim costs.
Knight suggests creating cash flow forecasts at least three months ahead at a time to provide time to find solutions.
“It’s much easier to deal with a cash shortfall if you know about it months in advance.”
2. Check in with clients and suppliers
Knight recommends maintaining close contact with the top 20% of your client base to understand how their businesses are tracking.
“Ask clients how they are feeling and what their pain points are, and gain an understanding of new ways that you may be able to help them this year and add value to their businesses,” he says.
“Check in with your key suppliers to gauge how they are performing. If their businesses are in trouble, plan for back up so your business won’t be disrupted.”
3. Review your marketing strategy
COVID-19 impacted consumer behaviour, so you may need to adapt your marketing strategy and tactics for the year ahead. Consider how your customer base has changed – whether their pain points are the same as they were a year ago, or whether the solutions they are looking for and where they are looking for them have changed.
“Look for cost-effective ways to generate new customers and a stream of cash,” says Knight.
This could include changing how you use social media to connect with customers and advertise, taking part in more community initiatives to ensure your business is top of mind for locals, or building partnerships with complementary small businesses.
Consider developing a deeper understanding of your target market through an email survey with questions about current priorities and pain points.
4. Manage your accounts receivables
Are your clients paying you on time? If not, Knight says it’s time to fast track your receivables.
“No one likes chasing overdue invoices, but outstanding payments will put too much pressure on your cash flow,” says Knight. “Consider a payment gateway system that allows customers to make credit card payments or pay via direct debit. You could also request upfront deposits or offer instalment plans for regular customers.”
5. Tap into government subsidies and stimulus
JobKeeper may be ending, but there’s still a range of government subsidies and stimulus available.
“It’s worth seeking out any extra support to improve your cash flow this year,” says Knight.
For example, the Victorian Government has pledged $2.6 billion in funding to support more than 125,000 businesses in hard-hit sectors, such as hospitality, tourism, accommodation, retail and the creative industries. If you’re in South Australia, the government has offered a 15-month deferral of payroll tax for businesses with annual wages below $4 million. You can find out about government grants, funding and support programs for small businesses across state and territories here.
Lashlie’s final advice for small businesses is relevant any time, but it’s sure to help as the end of JobKeeper adds pressure.
“Talk to your accountant,” she says. “I really relied on mine last year. They can guide you through cash flow forecasts and help you keep your books in order so you can focus on building your business.”
Talk to one of our small business lending specialists about how a Prospa Line of Credit could help to ease your cash flow concerns.
New year, new you! Now is the time to wipe the slate clean and get on top of your business finances so you can charge into 2021 full steam ahead.View more
Inventory management can feel mind boggling, but it doesn't have to be. Here is an expert’s advice on looking after your stock and planning for the future.View more
Subscribe to the Prospa Blog
Be inspired! Sign up to Prospa’s newsletter to receive tips, tools and small business success stories straight to your inbox.