For many of us, we’re looking forward to seeing the back of 2020. With all the hype around the start of a new decade this year, it’s definitely not turned out quite as planned. Whether you’ve been prevented from visiting family, ridden the roller Corona-coaster as a small business owner, experienced job insecurity as an employee or actually catching Covid- 19…it’s been unquestionably difficult.
From our side of the desk, we’ve assisted many of our clients through these unchartered waters and we’re pleased to report there’s not been one casualty.
Our region is experiencing an economic ‘bubble’ at the moment, with many people from south of our border migrating to Queensland. While no-one knows how long this will last, there’s 2 things Covid-19 has taught us.
The first lesson is the importance of cash flow. As advisers we do harp on about cash flow quite a lot. Not only cash flow but having cash reserves. Having good cash flow (not just profit) allows you to build a cash buffer to act as your ‘rainy day’ funds. The cash buffer allows to you weather storms like Covid-19. It will depend on your businesses thirst for cash as to what level of cash reserves is optimal for you and your business. What we do know is that having some is better than having none!
The second lesson is preserving your source of income. With Covid lockdowns, it highlighted the need to have a secondary source of income from your business if possible. We’ve seen this achieved by the rush to build online shopping platforms, selling complimentary products to the core business and reinventing how services are delivered. Whatever the strategy, it’s become apparent businesses need to be nimble and be able to adapt to change quickly.
The question for business owners is what do I need to do ‘now’ post Covid? Does my business model need to change? Do my clients now expect to receive my goods or services in a different way? What level of cash buffers do I need to achieve?
As always, we’re here to help.