The Road to the Other Side - Plan for the Worst

Updated: Sep 2, 2021

Small businesses across all industries have been placed under immense pressure over the last 18 months.

Supply chains have been challenged, customer buying behaviour has changed and business continuity has been challenged due to ongoing lockdowns.

The small business owner is taking the brunt of these challenges.

This article is aimed at all small business owners providing you a guide on what you can do to minimise the impact of the uncertainty and get you to the other side of this crisis by planning for the worst.


Experts predict that uncertainty will continue well into late 2021, and highly likely beyond as we learn to live with this virus.

Lockdowns will continue. Due to the uncertainties regarding the timing and durations of lockdowns, and the impact of the restrictions that have been put in place, it has been extremely difficult for small businesses to plan their activities to ensure the necessary customer interactions to deliver a consistent income.

It is with this context, that the recommendation for small businesses is to accept that these uncertainties will continue, and that this is the ‘new normal’.

There has been no more important time than now for a business to have a financial plan, and to review this plan on a regular basis.

Planning for the worst starts with understanding and managing your costs.

Cost structure

With the uncertainty with income generation, it is critical that the small business owner is managing their costs - both fixed and variable.

It is also critical that the small business’ cost structure is set up so as to provide flexibility and ability to adapt to whatever the future entails.

Recommendations would be:

  1. Be on top of your cost structure at all times

  2. Look to reduce and lock in any fixed costs

  3. Look to defer any discretionary spend

  4. And if you are reducing costs, make sure that the focus is on securing your business’ near-term viability

The term fixed costs applies to any cost that is necessary on a recurring basis for the operation of the business.

Examples of fixed costs within the business might include:

  • Rent

  • Supplies

  • Debt repayment

  • Payroll

  • Taxes

  • Insurances

Typically, the largest costs for a small business are Rent, Payroll and Materials / Supplies. At this particular time, these need to be constantly reviewed and where possible reduced.

Examples of actions I have seen to reduce fixed costs:

  1. Having a conversation with your landlord could give you the opportunity to reduce your rent

  2. Reviewing your staffing model, and changing the mix of permanents and casuals, could give you the opportunity to reduce your payroll costs

  3. Reviewing opportunities to reduce staffing, and as a result payroll costs, by automating key business processes

  4. And a review of alternate suppliers could also give you the ability to reduce your supplier costs

Variable expenses are those that change depending on how much you use the service. Many of these are necessary for your business to stay in operation, like utilities.

You will also find expenses in here that are not necessary for the function of your business, but would be nice to have, like education, or extras that can increase profitability. Those are called ‘discretionary expenses’, which you can roll into your variable expenses budget as well.

Some examples of variable expenses are:

  • Owner’s salary

  • Replacing old equipment

  • Office supplies

  • Professional development

  • Marketing costs

  • Utilities

During these times, you will need to lower your business variable expenses, beginning with discretionary spending.

Now, it is important to note that not all costs are equal. The focus should be on securing your business’ near-term viability and positioning your business for the medium-term.

Putting it another way, be careful when reviewing and potentially cutting costs. Do not remove all of your sales and marketing investment. Ultimately, your business needs to grow out of this situation by ensuring it has a sales and marketing strategy that increases demand for your products or services.

Understand your Customers

At this time, your Customers also are going through the same issues as your business.

For some small businesses, I have seen the emphasis has been on identifying new customers and neglecting their existing customers. While identifying new customers is always important, at this time it is critical for businesses to focus on their existing customers.

It is recommended that you increase your dialogue with these Customers, understand what they need at this time and consider how you can pivot your business to support these requirements.

And remember, there are lots of examples of small businesses thriving this year. Through discussions with their Customers, many have identified their Product / Service may not have the traction it once did and readjusted their Product / Service offerings.

It is a matter of looking at what opportunities exist for you, and seizing these as fast as you can.

Do not postpone the hard conversations or hard decisions

Whether it is talking to your landlord, laying off staff, pivoting or accepting that you need government assistance to ride out this new norm, do not put off making the hard decisions.

Go through your financials with a fine-tooth comb and reduce costs in your business where you can, as outlined above.

And, make the tough calls as early as you can, otherwise you are going to end up paying for your hesitation down the track.

Look for and ask for business assistance

There are a number of grants and financial lifelines being offered by federal, state and local governments, so make sure you check your eligibility and apply for what you can.

Additional government policies designed to help small businesses recover into next year are in the pipeline, so check again in a couple of months as the eligibility goal posts may have shifted.

Look for financial advice

Now is also a time for self reflection.

It is strongly recommended that you seek advice from an external party – someone who can assist you with understanding your personal situation and to assist with formulating personal and business financial goals.

Who is your financial advisor?

Ask for Support

Finally, these are difficult times for you as a business owner.

It is understandable that you are going through a whole lot of emotions at this time.

If you are struggling, please be aware that your situation is not unique – there are many others in similar situations.

But, again, there is support out there. Examples:

My Business Health | Australian Small Business and Family Enterprise Ombudsman (

Supporting you through the Coronavirus pandemic - Beyond Blue

Also feel free to reach out to myself, to learn more about free support available for Small Business Owners. Transcend is one of a select group of mentors providing free 4 x 2-hour Business Mentoring sessions in partnership with the Victorian Government and the Victorian Chamber of Commerce and Industry.

These sessions can be used in a variety of ways, depending on the challenges your business is encountering.

So, what to do? Contact us.

Transcend is a team of experienced business advisors and mentors that provides a support network to business owners who are looking to grow their business, improve efficiency or increase profitability. For more information refer to

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