SURVIVE, RECOVER AND THRIVE POST COVID-19 (May 18, 2020)

Most businesses in New Zealand are focused on survival. As a result, many are looking for handouts. Still, one Auckland accountant is cautioning that there is no such thing as free money and that businesses should instead be taking a three-step ‘survive, recover and thrive’ approach starting now.

BetterCo Manager Director Vinay Iswar says most of the inquiries they’re getting from business clients is around what money they can get. Most recently, the focus has shifted from the wage subsidy to the small business loan scheme administered by IRD.

The reality is, however, that if your situation is not survivable, then pull the plug and get out now. If your position is survivable, then take the necessary steps to survive, recover and thrive.

He offers the following tips on how to do it:

1. Take the Government money

“The fact is that it is borrowing, and it isn’t for very much. However, it’s interest-free for the first year and just three per cent after that, so for many small businesses, it is a no-brainer.

“A restaurant client of mine has nine staff and turns over about $80,000 in a good month, $45,000 in a bad month. Under the loan scheme, they’re entitled to $26,000 in the pocket, which is almost two weeks of revenue that they will have otherwise missed out on — but it’s still not a lot of money.”

2. Cut costs with a view to the future

Iswar urges businesses owners to cut costs, including personal expenses, without sacrificing the future of the business.

“If you have to get rid of the house in Remuera, the Mercedes Benz, the maid and the batch, then do so. But if you have a good manager who is worth his or her weight in gold, you could potentially be sacrificing the future success of your business if you let them go.”

3. Negotiate

“Cash is king,” says Iswar. “Go to your lenders and ask to change your loan terms to interest only. Alternatively, take a repayment holiday (deferred payment). You can do that with anything.

“Ring your landlord and ask for a reduction. If they say no, ask for a deferment. Some landlords are real asses and unsympathetic, in which case you need to evaluate whether that location is important or necessary to your business or not.”

4. Plan to recover and thrive

Iswar advises business owners to forecast a best-case scenario, a worst-case scenario and what they think is likely to happen, and then plan accordingly.

“Get expert help with your forecasting. Auckland Tourism, Events and Economic Development (ATEED) offer $5,000 funding for you to hire somebody to do it for you, so it needn’t cost you anything.

“In your recover and thrive planning, focus on your people and your purpose because it is easy to get rid of everyone and everything in the survival stage, but you will need them when you move into the recovery and thrive stage,” says Iswar.