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Small businesses have been urged to refrain from taking a “business as usual” approach as Australia looks to enter its first recession in close to three decades.
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Don’t adopt ‘business as usual’ approach, says insolvency expert
30 June 2020
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With the economy contracting in the March quarter and the government expecting a consecutive GDP contraction in the June quarter following COVID-19 shutdowns, small businesses have been urged to act now by focusing on factors in their control to put them in the best seat to react to any downturn.
Pilot Partners associate director Cameron Woodcroft believes businesses need to reset in order to survive a recession.
“The biggest risk is taking a ‘business as usual’ approach. Now is the time to develop or enact plans to identify whether or not you are focusing on internal operations, and also externally on your customers,” Mr Woodcroft said.
“Firstly, you need to determine your current position in all facets of your business including your workforce, operations, supply chain, cash flow and liquidity.
“Once you know your current position, you can identify the factors that need to be accelerated or slowed to conserve and/or generate momentum.”
Mr Woodcroft, a restructuring specialist, believes businesses can set themselves up for surviving a recession by following four key tips.
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These include regularly forecasting cash flow to plan for the worst-case scenario and maintaining flexibility in adapting the business to the current situation.
“Once you have forecasts, you must revise them on a regular basis to ensure you react as your business evolves or external factors change,” he said.
“Don’t forget that through this process, you may discover better ways to operate your business after any downturn.”
Mr Woodcroft also believes businesses should maintain open communication with clients and customers.
“Demands will change in a downturn, and making your business agile means being able to scale your business up or down to meet the demand of your customers,” Mr Woodcroft said.
“Alternatively, if it is difficult to scale easily, now is the time to identify efficiencies or shift your business to meet customer demands that were not being met before mitigating any business loss.”
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