Lockdown may have some positive side effects which could lead to improving our survival in the future, should we choose to embrace them. It is not necessarily a bad thing being forced to minimise our expenses and become more self sufficient. We as individuals have become quite consumerism-driven, which has led to insufficient usage of our limited resources. This could be applied in businesses as well, in that if they do not adapt, they could be forced to close their doors for good.
Fortunately there are plenty of methods available to assist in the transition of becoming more cost effective. Here are 5 practical ways to reduce expenditure without resorting to staff cuts:
Remove non-essential expenses
Identify expenses which are not core to your business and remove or cancel them. Also evaluate if there are alternatives to expenses you are not sure are a necessity, there might be more affordable or even free options.
Reduce fixed expenses
It is key to reduce fixed expenses as production and revenue are at a halt. The biggest expense most businesses have is rent, consider negotiating with your landlord for a reduction or alternative solution. Most banks have also announced payment holidays to their clients as a result of the pandemic.
Renegotiate fixed fees to a pay-per-use basis
Contact service providers to negotiate fixed contracts to pay-per-use contracts where possible. You might even be able to suspend certain payments until they are in use again for e.g. business internet lines.
Request payment holidays from suppliers
Instead of waiting for a notice of overdue payment, approach your suppliers with a proposal to defer payments. Many suppliers are expecting this in light of the lock down and it better to be in good stead with suppliers than to default on payments since business is a partnership after all.
Utilise SARS PAYE holidays
President Ciril Ramaphosa announced on 23 March that certain employers have been granted with tax relief benefits. Tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their employees’ tax liabilities over the next four months. Also a portion of their provisional corporate income tax payments can be deferred without penalties or interest over the next six months. For more info visit the SARS webpage: https://www.sars.gov.za/Media/Pages/CoronaVirus.aspx
In our current economic climate it is essential for businesses to estimate a forecast as to what the next couple of months will look like under the Covid-19 pandemic. Furthermore, investigate the possibility of an online business model if your industry allows it. The future business landscape will be very different to the norm we were once used to, but the key to survival is adaptability and resilience. Make sure you utilise every opportunity at your disposal, you and your stakeholders survival depends on it.