I think we're all feeling the impact of the political unrest in Ukraine. While individuals are noticing the impacts across petrol bowsers, and in the grocery store, many small businesses are struggling to make a profit in the face of searing costs and limited supplies.
It's time to review your Business Continuity Plan
Small businesses operating in Western Australia have been faced with global uncertainty for over two years now. The impacts of COVID-19, the prolonged hard border closure, bushfires and flooding, and now a war in Ukraine, have had enormous impact on global supply chains. You have likely already felt the impacts of searing prices and stock shortages, and the knowledge of what lies ahead has many business owners feeling nervous.
Your Business Continuity Plan should form part of your business plan. Devising and updating your Business Continuity Plan is vital in providing you the peace of mind in knowing you will be able to continue operating your business during a period of, or after, a crisis or incident.
What do I need to consider?
You can either work with your Accountant on all/some parts of your Business Continuity Plan, or compile your Business Continuity Plan on your own.
Either way, you should address the following factors when devising or reviewing your plan.
- Cashflow
- Profit improvement
- Business viability
- Efficiency of businesses processes
- Alternate marketing strategies that can be employed if/when required
Cashflow
When compiling your Business Continuity Plan, you'll need to undertake cashflow forecasting.
Cashflow forecasting is the estimating of future sales and expenses. Your cash flow forecast will tell you if you have enough cash to continue running your business, and if you have the cash available to expand it. It will also show you if more cash is going out of the business than coming in.
Profit improvement
Planning for profits improves profits. Your profit improvement plan will:
- Let you know when cash will become available
- Enable you to plan for business growth
- Help you plan for upcoming expenses and tax obligations.
Business Viability
It's vital to run a business viability assessment to ensure your business is surviving.
A viable business has the following attributes: It’s returning a profit sufficient to meet creditor obligations and provide a return for the business owners, and has sufficient cash resource to sustain itself through a period where it isn’t returning a profit.
Efficiency of business processes
Analysing your business processes is about deeply examining your internal processes to find opportunities for improvement.
Are the day-to-day operations of your business as efficient as you are able to make them? Are you utilising automation and digital technology to its full capacity? Do your processes align with your overall business goals?
Alternate marketing strategies that can be employed if/when needed
If supply chain disturbances are impacting your export market, you may need to look at alternate marketing strategies. For example, you may need to focus your efforts on new markets, or return your efforts to markets previously targeted.
Would you like help in compiling a Business Continuity Plan?
As your Business Advisor, I can help you to devise an effective Business Continuity Plan, specific for your business.
This plan will provide you with the peace and certainty that you can continue to operate your business, and you've got steps in place to continue operating, should supply chain issues or price hikes directly impact you.
If you'd like assistance, reach out today. Contact me at cheryl@smithshearer.com.au, or fill in the form below.
Best wishes,
-Cheryl
