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A Way Forward for Small Businesses

For these small businesses to come back after the pandemic abates, they need aid. The Government has announced many support packages and there may be more to come. But business owners also need to take control of their future and make the best possible decisions to get them through this difficult period.

Recommendations for navigating the current crisis

1. Don’t rush your decisions, but do make plans.

It is easy to panic when thousands are dying, the stock market is crashing, and unemployment is skyrocketing. Don’t! Research has shown that people are more likely to make mistakes when they are cash strapped and primed to think about financial stressors — a state that describes a lot of people right now. Here are some strategies for making good decisions when the world is in flux.

First, give yourself time to decide. In the current climate it can be tempting to run out and make big decisions — to just do something. Many entrepreneurs like action and refuse to leave something sitting on their desk when they can help it. But that’s a bad strategy when every day reveals a bit more about how the Covid-19 crisis will play out. Everyone makes better decisions when they have better information, and you will have more information tomorrow than you do today. Before making any big leaps, take a cooling off period — and maybe even having a trusted third party such as a friend or colleague look over things with you — might help you avoid doing something you’ll come to regret.

What you can (and should) do right now is start making detailed contingency plans. These are overwhelming times, and “save my business” is a daunting task. But “Day 1: Call my landlord, Day 2: Sign up for a loan,” and so on feels more reasonable. Break your big goal into smaller goals and focus on achieving those.

2. Figure out how your customers’ needs have changed.

This Covid-19 pandemic is a shock for the whole world. Almost all of your customers’ lives are different than they were a month ago, and they will probably be different again in six months. They may never be the same. Your short-term cash flow depends on providing them with goods and services during the crisis. Your long-term viability depends on understanding how their needs will be different when the pandemic is over.

The first thing to consider is that people are building new habits right now. There are millions of isolated households whose normal routines have been upended, and just like them you have to experiment if you want to remain a part of their lives. Some restaurants are offering takeout comfort food, even if they usually just serve in their dining rooms. Retailers are emphasizing online experiences. Your customers don’t need a vapid email about how you care about them, but they do need entertainment and comfort and hope. Some of their new habits will persist after the pandemic, which means it is particularly important for you to figure out how to continue to offer services that deliver value during the crisis.

3. Do some realistic accounting.

Perhaps you can reinvent your business and keep revenues up during the pandemic. Perhaps you can thrive in the post-pandemic world. But most businesses are suffering enormously, and after you’ve searched for creative solutions and have given yourself time to plan, you’re likely going to need to make some hard decisions.

First, try to form realistic estimates of your cash flow both during and after the pandemic. Compare that cash flow with your fixed expenses and with those expenses that you can cut. Remember that sometimes it makes sense to cut the more flexible expenses early, so that you can still keep paying the more vital expenses later.

Next, figure out which expenses can be delayed. Be transparent to landlords — or whoever you need to pay — about your situation. But be aware that it might not be easy to catch up.

4. Keep your best employees loyal.

Your workers are always your most valuable asset. If you lose your best ones during the crisis, rebuilding your operations is going to be even more difficult. Even if you have to cut labour costs dramatically during the crisis, you want to maintain your ability to rehire your best workers when the world is open for business again.

The key here is to focus on the long term and to be human. No matter what happens with your business, this is likely a devastating time for employees for all kinds of reasons. Many of them have elderly relatives, for instance. Do everything you can to make sure that they are safe and to show that your care about their well-being. Generosity during a crisis can make a relationship far stronger.

To navigate the current crisis, it is necessary for owners and managers of small businesses to act both with a sense of urgency and with prudence. It’s important to understand the broader landscape. And it’s critical to be aware of the potential for avoidable mistakes in decision making in these situations. By taking stops to avoid such mistakes, and by thinking through the broader set of levers available right now, it is possible to navigate this complicated landscape.

For advice, call the NT Business Helpline on: 1800 229 500

 

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Phone

Darwin
1800 229 500

Alice Springs
08 8951 5788

Darwin Office

Lower Level
20 Catterthun Street 
Winnellie NT 0820 

PO Box 37192, Winnellie NT 0821

Alice Springs Office

Central Australia Development Office (CADO), 55 Todd Mall, Alice Springs NT 0870 

PO Box 81, Alice Springs NT 0871

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