We wish our clients and all the Kenyan Citizens good health during this difficult period and we hope that normalcy is restored soonest and that a solution is found to avert more loss from COVID-19
HOW TO SURVIVE IN BUSINESS AFTER TRADING DISRUPTIONS OF COVID-19
Since there may not be cash inflows on a regular basis, SMEs may need to come up with strategies in order to safeguard the cash flows and finance key important aspects of the business. There is a high liquidity risk that might result from the COVID 19 crisis and therefore a need to apply some measures in this regard as follows:
- Minimise or avoid capital investments; Investments in long term assets of the business may not be necessary at this time but most important is to finance short term obligations as they fall due. We therefore advice that companies to consolidate their cash assets and preserve them to meet their operational needs during the COVID 19 Period.
- Negotiate terms of payments with suppliers and Financial Institutions; in order to minimise cash payments, more than before, it will be critical for the SME leaders to consider negotiating terms with various suppliers and financial institutions in order to reduce the risk of suppliers terminating services and influencing business continuity. Some of the areas to look into while negotiating the terms are debt rescheduling, staggered payments to suppliers etc.
- Salary Payments to Employees; It may not be possible for companies to honour their salary obligation to employees and therefore need negotiate with employees to take some percentage of salary if not 100% so that to ensure survival while businesses may struggle. it is not advisable for entities to terminate employees this time but rather have discussion in place. Entities may also decide to give leave days to employees who are not actively engaged so that to cut wastage of useful time.
As a result, COVID-19, most people will be glued on social media to monitor the global trends with regards to COVID-19 pandemic, it is an opportunity for SMEs to engage in online marketing campaigns in order to enhance brand visibility. It is also a great opportunity for most entities to rethink e-commerce and ensure business sustainability during this particular time. We expect to see more of online shopping in order to minimise interaction that is a resultant of the COVID-19 Pandemic.
Time for Staff Training and Strategic Rethinking
As most entities slow down on their customer interactions, more staffs become idle and its time to think of increased staff training activities in order to deepen their understanding in the areas of influence. This is to enable the staff to bounce back in full force in the circumstances there is recovery.
As Most people retreat to their homes in order to prevent the spread, it might offer a great time for soul searching and strategic rethinking of business ideas and processes so that we are able to model service and products that will respond to our customer needs.
As we experience economic slowdown, it may be worthwhile for entities with excess liquidity, after provisioning for their most urgent needs to invest in assets that are significantly undervalued because of the crisis, this may lead to some capital gains in case there is recovery.
Tax Compliance and Payment of Tax Liabilities
As observed for other jurisdictions, there has been trends to adjust tax payments in order to save the citizens to non-compliance costs. We hope that Kenya Revenue Authority will also respond to this earlier enough so as to cushion the citizens from excessive terror that is created by the COVID19. Until then it is important for SMEs to make arrangement for filing their tax return so that they don’t suffer heavy penalties and interest during this period.
Business Continuity Plans;
For Business that may have to continue in Operations; You may need to make alternative arrangements with suppliers and employees on the materials needed to avoid missing out on key supplies during your work.