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Projects on hold and no cash coming in?

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The risks of freezing an upturned economy

With the current unpredictable economy, many businesses have put their development plans and various projects on hold. This is a safety measure necessary to keep a rein on the finances of a company and prevent it from spiralling out of control.

Sometimes, there are no alternatives but to stop projects for an undetermined amount of time.

With lockdowns and the difficulty to work face to face, many businesses were forced on hiatus. The government incentives helped keep the more weakened businesses afloat, but the support is limited and inadequate.

This opens a new question: when you are compelled to bide your time, either by projects having to be put on hold or by preventing yourself from investing for future returns because of the risks, how do you keep going? How do you continue paying wages and rent?

Are businesses’ COVID-19 financial problems at an end?

The economic dip is not finished, aggravating the problem of many family businesses. Throughout the last year, there have been many ups and downs. Nothing is certain, least of all, when suspended projects will be able to run again.

Now, as a result of the recent Delta variant impact, with Sydney and Melbourne having been in lockdown, we’re in the middle of another dive.

When governments order many businesses to close their doors and people to leave home as little as possible, it’s hardly surprising that economic activity stagnates and plunges.

But with your project work having been on hold, and without a looking glass into the future, how can you control the health of your business?

How can you navigate out of this tough spot?

What are the signs to watch out for to survive until the economy is restored?

Until some continuity and consistency in the economy appear through high levels of vaccination, you will have very little control over the events that will affect your company. Small businesses and medium businesses are the ones that usually suffer the impact most.

All around, family business owners worry about trading debts, tax debts and protecting their personal assets. Fending off statutory demands and directors’ penalty notices sucks the life out of you. A litany of questions plague business owners in those difficult times: how do you meet your wages, rent and suppliers debts short term and long term? Are you being paid by your customers? Is there a cash reserve for you to draw on?

Business financial stress is unavoidable, but with clear insight into your situation, you can forge a reassuring path forward, knowing what action has to be taken in a range of different situations.

How can you stabilise your business during a financially difficult period?

It is important to remember that a healthy cash flow is at the very heart of your business. Cash is critical for you, and your cash position needs to be at the forefront of your mind. Only once you are clear on what you have and are projected to receive, can you effectively manage what is in front of you.

The questions you absolutely need to have an answer to are:

  • How much cash do you have and how much do you absolutely have to spend?
  • How much cash can you raise by other means and by when? And how?
  • You need to identify where to commit cash and where you can stop using your cash.

Many business owners do not do this very obvious analysis and remain without insight into their situation and their future.

Admittedly, even the experts cannot predict what will happen next, despite a surge in the economy after the last lockdown in late 2020 we can never be sure it will happen again. This is why a thorough and conservative analysis of your cash position is paramount and should be undertaken as soon as possible.

Debt stress and in particular tax debt stress is a recurring theme in many struggling businesses and protecting your personal assets for your family must be the highest priority for you.

Get help today

We can help. Start with a no-obligation chat with Climb Business experts about where your business sits right now and how we can plan to turnaround your business.

In one hour, you can have a much clearer view of your business’ possibilities and how we can plan a turnaround.

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