A COVID-19 Survival Guide for Small Businesses

Last Updated: 01 April 2020

More and more business establishments in Australia have been closed or allowed to operate with restrictions as the government continues its efforts to combat the coronavirus outbreak.

While the temporary business closures or the restrictions placed on various establishments can prevent people from going outside their home, this measure also causes tremendous loss of income for many businesses, especially those that provide “non-essential” services.

To help small and medium entrepreneurs survive the coronavirus crisis, the government has provided financial assistance for sole traders and companies.

With smart business strategies, SMEs can make use of this assistance to survive the uncertain time and thrive after the COVID-19 crisis.

The Coronavirus Impact on SMEs

Almost all businesses are negatively affected by the Rona and the lockdown that it caused, but there are specific industries that are taking a massive financial hit. These are the businesses that have been closed or restricted in their operations.

Offering “non-essential services”, these establishments mainly provide convenience, wellness support, and entertainment and, thus, are deemed less impactful to life, health, or personal safety.

Below is a list of the establishments and venues that are restricted or prohibited to operate these days, as well as those that are running their business as usual.

Some Rules Vary Across States

NSW

Stage 3 ban. Businesses that are not allowed to operate and those that operate but do not observe social distancing and limit social gatherings to more than two people will be fined $55,000 and further penalties for each day the offence continues.

Victoria

Stage 3 ban. Businesses that do not observe the social gathering restriction of more than two people will be fined $9,913 with larger fines issued through the courts.

Queensland

Anyone found gathering with more than one person will be fined up to $13,300.

South Australia

Outdoor social gatherings of up to 10 people with the 1.5m distancing rule are allowed. Businesses that breach the order could face a $5,000 fine.

West Australia

Businesses that ignore social distancing rules will be fined $5,000.

Tasmania

Tasmanians who leave their homes for purposes other than getting essential supplies, going to work or school, exercising, attending a medical appointment, or providing medical care will be fined up to $16,800.

Northern Territory

NT has closed its borders but hasn’t gone into full lockdown. Fines for individuals and businesses who breach orders are not outlined.

Business Implications

The negative effects of the coronavirus outbreak on businesses, especially those that provide “non-essential services” are massive, including:

• Dwindling sales and stock prices
• The decreasing volume of supplies
• Slow logistics and transport
• Diminishing workforce due to illness and employment cost-cutting
• Slow customer acquisition growth rate for B2B companies
• Poor investment opportunities
• Permanent business shutdown

Generally, people are forced to spend more on healthcare and disaster preparations and less on other expenditures. Many are also spending less because they are earning less than what they used to because of reduced working hours or, worst, have been laid off.

Financial Assistance

Amid the temporary closure or imposed restrictions on certain businesses, the government has provided financial assistance to support those that are affected.

Sole Trader

• Increased instant asset write-off for businesses. Businesses with less than $30,000 individual assets can now benefit from up to a $150,000 threshold for assets that are either installed or ready for first use by 30 June 2020.
• Backing Business Investment (BBI). Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation.
• Increased and accelerated income support. A new, time-limited Coronavirus supplement is available to be paid at a rate of $550 per fortnight.
• $1 billion support fund. This will provide assistance to industries and regions severely affected by the economic impacts of Coronavirus.
• SME Guarantee Scheme. Businesses with a turnover of up to $50 million will be eligible to receive these loans.
• Early access to superannuation. Sole traders can access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
• Tax support. The Australian Tax Office (ATO) is providing relief for some tax obligations for businesses affected by the outbreak, on a case-by-case basis.

Company Without Staff

• Temporary relief for financially distressed businesses. This includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility to provide temporary and targeted relief from provisions of the Act.
• Increased instant asset write-off (same as above)
• Accelerated depreciation deduction arrangements. Businesses with a turnover of less than $500 million can deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
• Increased and accelerated income support (same as above)
• $1 billion support fund to assist affected regions, communities and industries.
• SME Guarantee Scheme (same as above)
• Tax support (same as above)

Employers

• Temporary cash flow support. Eligible businesses will receive at least $20,000 up to a total of $100,000 payment.
• Assistance to help pay the wages of apprentices or trainees. Eligible employers will receive a reimbursement of up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
• Income support payments for casual employees

How Small Businesses Can Survive and Thrive

SMEs, although struggling to survive in this uncertain time, can emerge victorious by managing what can be controlled and using available finances wisely.

1. Seek financing when needed

Small business owners, especially those that are experiencing a significant loss of sales, can take advantage of low-interest rate business loans and repayment holidays that are offered by Australia’s leading banks today.

2. Promote a must-have product or service

Consumer spending is tighter today so make sure to highlight your best-selling product or most-in-demand service. Introduce a new product or service or provide a seasonal discount for your bestsellers to attract more consumers. Also, don’t sacrifice quality for quantity to avoid negative reviews. Remember, most people are on social media.

3. Cut workforce expenditure

It’s ideal to employ seasoned business experts to help your business navigate through the COVID-19 crisis, but it is not the best time to spend big on high-cost employees. In fact, you may even need to prune your workforce expenditure. If you need experts to keep your business running, hire consultants and remote help instead.

If you need to pay for apprentices or trainees, apply for a wage subsidy from the government.

4. Maintain a positive cash flow

There are plenty of ways to keep your business cash flow positive, including:

• Send invoice to customers early or more frequently.
• Collect payments faster. Offer a modest discount for the early birds if you need to.
• Limit customer credit
• Pay vendors on time with a credit card so that more of your cash will stay in the business
• Minimise inventory but maximise its turns.
• If your products or services are in demand, raise your price. If you can’t risk losing old clients, consider offering the increased price only to new customers.
• Offer premium or bundled services to increase per-client spending.
• Streamline your workflow to improve productivity.

5. Seek investors

It is better to team up with investors than lose your business to the coronavirus crisis. This won’t be easy if you’re providing non-essential services since investors are likely to invest in companies that are profitable.

For digital health startups, however, the economic slowdown may not be much of a problem. A growing number of investors are seeing profitability in health tech.

6. Fortify the marketing efforts

Now is not the time to cut back on marketing. In fact, marketing is essential to keep the business momentum going and the sales funnel running in this challenging period.

Invest more in digital marketing than in traditional advertising. As many people stay at home and watch the world unfold through their smartphones, the opportunity for business promotion on various online media platforms is tremendous.

7. Use remote teams

Operate in a cloud to save money on office rent and utility bills. Aside from keeping employees safe and healthy at home, you can also tap into the best talent worldwide (sometimes, at a much lower rate than the local workforce).

8. Lead by example

Stay calm and optimistic in this uncertain time. Promote healthy habits and stay informed of the coronavirus outbreak. As a business owner and leader, you should always serve as inspiration for your employees.

Apply for a business loan online! At Positive Lending Solutions, we match your credit profile and need with our wide network of lenders across Australia. We also take your application processes online so you don’t have to personally visit banks and other lending companies.

Call us on 1300 722 210 or complete the Loan Pre-Approval form now!

See also:

How to Buy a Car During the Coronavirus Crisis

Can You Get Finance Under the Coronavirus Lockdown?

$150k Instant Asset Write-off & How You Can Make The Most Of It