Coronavirus is starting to bite businesses
It seems the coronavirus outbreak is starting to bite Australian small businesses.
I recently spoke to a landlord on the Gold Coast who says he’s had two Chinese restaurant tenants break their leases in the last fortnight.
I also spoke with an international education provider here in Melbourne who told me their business has seen a 40% reduction in inquiries from China, India and Korea, and more than a dozen cancellations from on-campus residents.
Real estate agents in Melbourne and Sydney are celebrating booming clearance rates but reporting a significant downturn in Chinese interest, with inquiries in Balwyn and Box Hill at the lowest rates they’d seen in a decade.
There’s no doubt it’s been a tough 8-10 weeks across Australia, with devastating bushfires, damaging storms, and now the coronavirus spooking consumers into staying home and not spending money. This, of course, is causing cashflow problems for many small businesses.
The key to mitigating cashflow risk is examining carefully how you’re funding cashflow in your business, and perhaps looking beyond the banks for other options. It’s also more important than ever to ensure your business interests are structured in such way that your personal assets aren’t at risk if the business goes under.
Another option that I’ve heard discussed among small business owners is re-examining how your employees work. Considering an office downsize, or sharing an office space and encouraging employees to work from home wherever possible could be a way to cut some costs.
The sad reality is that almost 40% of small businesses fail in their first five years under ordinary circumstances. Under these current conditions it’s hardly surprising that many are starting to feel the pinch. And unfortunately, I don’t think we’ve seen the worst of it yet.