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Crisis Management

Ignorance is rarely bliss, and in the case of business, it can be catastrophic.

When you’re running an SME, it can be comforting to think that a business crisis won’t happen to you.

After all, you’re too small to make too many headlines, right?….. And you’ve got insurance for everything else, right? However, crisis management planning isn’t just about avoiding negative PR. It’s about making sure you’ve got the financial sandbags and expert support in place to weather whatever storm comes your way.

Business crises can come in many forms. From simple things like an important member of staff stepping down, to major global events, here are the sorts of scenarios that every business should be planning for:

  • Natural crisis – flood, fire, cyclones
  • Technological crisis
  • Personnel crisis
  • Financial crisis

So, how do you financially prepare for a crisis in your business?

Given the range of crisis above, it’s essential that your business crisis strategy is strong and adaptable enough to cope with a variety of scenarios.

  • Step one: identify and measure the risks.
  • Step two: examine and implement solutions.

Of course, not all risks will be this immediately apparent, or have a clear-cut solutions. So it is important to dedicate in-depth thought and planning to your risk management and mitigation in your business.

Finally, remember that your job isn’t done once your crisis management plans are in place. Initially, you must communicate your plans with all the stakeholders across your business, in a sound and confident way. And secondly, you must never assume your plans are set in stone. To be truly effective, an SME crisis plan should be a living document: always adapting, improving, and responding to the latest changes in and around your business environment.

Latest Victorian Government Business Support

Just to give you all an updated outline of the weekend’s press conference:

In view of the extension of the lockdown, the Victorian and Commonwealth governments have continued with their support of small and medium businesses (SMEs).

Business Costs Assistance Program

Recipients of the Business Costs Assistance Program Round Two or July Extension will continue to receive automatic payments which will now be determined by the business’s payroll. Grants will range from $2800 a week for businesses with an annual payroll below $650,000, and $5600 a week for up to $3 million in payroll costs and $8400 for payroll of up to $10 million.

Licensed Hospitality Venue Fund 2021

Licensed hospitality businesses that have previously received grants under the Licensed Hospitality Venue Fund 2021 or July Extension programs will receive automatic payments based on premises capacity. Businesses will receive $5000 for a capacity of up to 99 patrons, $10,000 for under 500 patrons and $20,000 for more than 500.

Live Performance Support Program (Suppliers) Round Two

The Live Performance Support Program (Suppliers) Round Two provides up to $4000 in total support per applicant for those suppliers affected by the cancellation or postponement of events. Suppliers may be eligible for either $200 or $500 per event. They can apply for support for up to 20 events. Applications are now open and close on 8 September 2021.

Live Performance Support Program (Presenters) Round Two

The Live Performance Support Program (Suppliers) Round Two provides grants of up to $12,000 in total support for live performance event presenters affected by the cancellation or postponement of events as a result of lockdowns. Applicants can apply for either $5000 or $7000 for one event and a further $5000 for a second event. Applications are now open and close on 8 September 2021.

Small Business COVID Hardship Fund

For those SMEs that are not eligible for other government assistance and whose turnover dropped considerably due to the COVID-19 restrictinos, grants are now available up to $20,000. Those businesses who have already received this grant will receive an automatic top-up payment of $6000. Applications are now open and close on 10 September 2021.

For Further details and to register, head to https://business.vic.gov.au/

SME Recovery Loan Scheme

The Commonwealth Government’s SME Recovery Loan Scheme is designed to provide continued assistance to SMEs, including self-employed individuals and non-profit businesses, that are dealing with the economic impacts of the COVID-19 crisis. It provides access to eligible SMEs for loans of up to $5 million over a term of up to 10 years. Eligibility criteria has now been updated and it is no longer a requirement to have received JobKeeper during March 2021 or to have been a flood affected businesses to be eligible for this Scheme. Application are now open and close on 31 December 2021.

For further details and to register, head to https://business.vic.gov.au/grants-and-programs/sme-recovery-loan-scheme

Strategies to Improve Small Business Profitability

Profitability is one of the essential number all small business owners need to track to generate cash buffers. Increase your profitability, cash flows in. Reduce your profitability and times are tougher for your business. Here are 7 strategies to improve your business’ profitability.

  1. Monthly Sales Targets
    So many business owners run their businesses blind. They just go with the flow and hope for the best. If you are serious about generating profits and creating a cash buffer, you need track your business’ results. The first place to start? Tracking your sales targets. Figure out how many new customers/clients and/or products you need to sell per month to generate your desired profits. Then map out a plan that will get your business there. Depending on your industry, you might want to consider tracking daily sales targets or weekly sales targets. At a minimum, you should be tracking sales targets monthly. This provides you with actionable data to help you tweak your sales process until you figure out how to exceed those sales targets.
  2. Improve Your Internal Processes to Create Greater Efficiency
    Efficiency in a business is a great way to improve a business’ profits. Streamline your systems and reduce or remove any processes and systems that do not add value to your customers and clients. The “well, cause I’ve always done it this way…” mentality kills any business’ progress. Business owners and managers need to constantly review and revise. You should always be looking for better & more efficient ways to offer your services, make your products, and cut out the BS. Efficiency grows profits!
  3. Pricing Strategy
    Have you got a pricing strategy in your business and how’s it working out for your business? Lots of business owners think they need to offer discounts or compete based purely on price to make sales. This can be a disastrous strategy – both can kill your profits if not implemented properly… constantly think about the product/service margin in these strategies and is there enough room in the sale price to cover the costs.
  4. Profit Margin per Sale
    The most profitable business owners we know track their profit margin every day, week and month. They know the monthly profit margin of their business each and every month. More importantly, they take it a step further and track the profit made on every sale. Why is this important? This helps to discover the most profitable products and services in the business. Allowing you to focus your employee’s efforts on promoting, offering and selling these more profitable products and services. Stop chasing sales that actually cost you money.
  5. Decrease the Break-Even Point
    The break even point is the amount of sales you need to cover your business’ expenses. When you bring in more money than your expenses (break-even point), your business starts to generate a profit. To do this effectively, it’s important that know your expenses, track them, recognise what you spend your money on, and don’t let them get out of control. By keeping expenses low, you can keep your break-even point low…..this makes it easier to run yourself a profitable business.
  6. Add Value to Your Target Market
    What is your Unique Selling Point or Value Proposition and how does this fit with your Target Market? This can be a hard thing to figure out. A lot of business owners think their customers care about what they care about. …BUT, in reality, their customers value something different. Talking to your customers might shed a different light on what they value and want from your business.
  7. Measure and Improve Your Sales Lead Conversions
    Lead conversion metrics actually quantify the effectiveness of your sales process. Start by tracking the number of leads you have actually closes, out of the total number of leads for the month. Let’s say your business was successful in closing 10 out 100 leads this past month. This means you close every 1 out of 10 leads. So, if you can improve your sales to close 2 leads out of every 10, your number of sales has just doubled. This will have a significant impact on improving your business’ profitability.

Profitability is an important part of running any successful business. As you can see, there are numerous ways to improve your business’ profitability. Choose one of the above suggestions & give it a try. When you master that, start working on another strategy to improve your profitability. Feeling overwhelmed? Give us a call, our team can help you put these profitability strategies into place.