Monthly Archives

July 2020

Hard truths: How to know when to close your business

By Business Advice, Journal entry No Comments
Image source: Craig Whitehead via. Unsplash

Early on in the corona virus pandemic, it came as a worrying surprise when several businesses shut up shop.

However, the further into uncertainty we go, means later closures have almost come as heavier blows.  One example is Melbourne’s iconic restaurant Ezard which had been open for more than 20 years, which heralded the tough conditions across industries when they announced permanent closure in June.

Chef Teage Ezard said coronavirus wasn’t the sole reason for the closure but said “It was just time”.

This is the key.

Pandemic and economic uncertainty aside, knowing when to close down is important.

Ultimately, timing a closure well is one of the best business (and potentially personal) decisions you can make. It will save you money, time and stress, even more so if you have staff to manage.

The six-week lock down in Victoria has been a shock to business owners, especially those recently re-opened and reliant on face-to-face contact including gyms, cafes, pubs and beauty salons and many will now be faced with tough decisions on how to take their business forward.

Here are a few things to consider if you’re facing a difficult second half of 2020:

What is the new normal?

If you are running a private business, the unfortunate reality is you can’t rely on temporary government handouts to survive and so business viability must be considered beyond the stimulus of JobKeeper as it continues to evolve, increased tax benefits and deferrals to loan repayments.

Businesses will now need to evaluate the new (some temporary, some not) rules for what constitutes “business as usual”. It is likely that this will come with some degrees of uncertainty.

Some things to consider include:

  • Where will your customers come from?
  • Do you still have access to the same supply chain?
  • Can your revenue sustain the same staffing levels (more or less)?

Are you chasing your way down?

The danger of the transitory nature of the current climate is being lulled into a waiting period where it feels like things are on pause.

While the JobKeeper stimulus is a fantastic measure that is allowing many businesses to keep on staff, if you are not generating revenue, you must also pay attention to the potential pay-out liabilities of annual leave, superannuation and more.

In addition if you’ve deferred loan repayments, or taken out further loans, can you afford to keep servicing these?

Can you pivot?

Image source: Eiliv Sonas Aceron via. Unsplash

As an industry, hospitality is suffering through reduced in-venue dining numbers due to lock-downs, a pivot to reliance on takeaway and delivery or a switch to an e-commerce model selling food and beverage beyond their meals.

But there is opportunity in the struggle.

Many hospitality businesses will have diversified their offering for the first time into ecommerce or takeaway, giving their business the best chance of survival now, and long-term potential for greater profit margins when things do return to normal.

Other business owners should consider the pandemic in the same way. Is there a better, safer way to do business or access channels and markets that you wouldn’t have had time or scope to approach in the past?

Social distancing and public health concern has opened a door for technology into our restaurants. What is this crisis doing for your industry?

The hard decision

The hard truth is, that like Ezard, the right decision for your business might be to close.

We recommend considering the following carefully to guide your decision:

  1. What is your projected revenue and will it drive the business you want to run?
  2. Are you still able to maintain personal health and passion for your business?
  3. Are your customers engaged and interested in your product or service?
  4. Are your staff engaged and sticking with you?
  5. Can you temporarily put your business on pause?

Contact us today at info@ravitinsights.com.au