More than business: how should business owners approach their finances during a crisis?

For business owners, particularly those in smaller or family-owned companies, personal and business finances are often heavily intertwined. For many, COVID-19 has presented significant challenges; for others, there may have been opportunities. Regardless of where your business stands, it’s important that you have the complete picture and a plan in place to protect and grow your finances into the future.

At Apt, we work with business owners across a diverse range of industries to help them with business and personal financial planning to weather financial storms, set themselves up for the future, and reach their personal and business goals. Here are some trends we see and tips to navigate your finances during COVID-19 and beyond.

Business planning and cashflow management are critical

One key trend we are seeing is that businesses who had a strong business plan already in place and managed their cashflow well are in the best position to ride out disruption and/or capitalise on opportunities.

If you don’t have the right business plan in place, you can start working on one now.  While you may have felt many negative impacts from COVID-19, it may also be a window of opportunity to look at your business from a different angle.  When we are caught up in business as usual it can be hard to see the full picture and make the right moves that protect and grow our finances.

The right planning can help you emerge from the crisis in the best possible situation, with a full understanding of your current position and a roadmap in place to strengthen it into the future. Here are some tips to navigate today’s challenges and prepare for the future.

Identify key team members

Whether you will need to stand people down or not, it’s important to identify the team members who will play a critical role in your recovery. With so many options available under the Government’s stimulus package, it’s well worth talking to your adviser about whether any of them make sense to help you retain the people you will need to face the challenges and realise the opportunities ahead.

Take an in-depth look at your cashflow

Beyond just reviewing the top-line figures, take a detailed look at your expenditure. Review credit cards, BAS statements, and any other relevant financial documents to explore your costs in detail. You might be surprised at where you can easily cut or pause non-essential costs. Think about things like industry association memberships, publication or website subscriptions etc., that aren’t critical to the day-to-day operation of your business.

If you have debt, talk to your lender

Most lenders are offering some form of relief for borrowers, so if this cashflow is an issue for your business right now, pick up the phone and find out what is available.

Review your commercial property needs

Current circumstances have left many business owners realising that they can work and achieve the same results in a remote workplace.  For some, this may mean a reduction in the amount of space required in the longer term.

Even if you will have the same space requirements ongoing, the commercial property market is largely favourable to tenants at the moment, so it might be worth speaking to your landlord about the terms of your agreement or considering a move.

Invest in the right technologies

With the move to working from home, many businesses have made short-term technology purchases or subscriptions to meet immediate demand. The reality is that the business landscape was always moving towards remote and flexible working – COVID-19 simply accelerated the shift. The technologies you invest in today should be those that will provide long-term benefits for your business and allow you to continue navigating an ever-changing business environment.

Think about the long term too

While there are many pressing issues for businesses arising out of COVID-19, it’s also important to consider what recovery and beyond looks like for your business. A few things to consider here include:

• Succession planning – will you sell the business, or is there someone who will take it over?
• Estate planning – it’s not nice to think about, but as a business owner you should have a practical plan in place for what would happen in the event of your injury or death.
• Business and income protection – do you have the right cover in place for yourself and your business? Often this is an area where a review can, most importantly, get you the right protection, but in some cases also save you money.
• Asset diversification – if all of your assets are in the business, you are taking risks that could impact your future. Setting out a plan for how much cash you will move into other assets, whether this is super, property or shares can de-risk your retirement.

Get your expert advisers working together

From your accountant to your lawyer and your financial planner, your advisers should be collaborating.

At Apt, alongside ensuring business owners can live for today while planning for tomorrow, we work closely with your other advisers. This ensures you have an expert team in your corner, who are all working towards the same goal – your business success and, ultimately, financial freedom.

If you haven’t got the right adviser who can act as your financial coach and help you plan for the future, now is a great time to get started. Contact Apt Wealth Partners to find out how we can help.

General Advice warning

The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.