Last week was a bad one to be off recovering from surgery, as the middle-east crisis kept markets on their toes and the business environment uncertain.
Nothing really changed over the weekend, with a ceasefire, failed peace talks, and an apparent return to the escalation ladder by the Americans, keeping things uncertain.
For SME’s in Australia the message should be clear, this is not ending any time soon. Neither party seems willing to make compromises to reach a settlement, and we haven’t seen flows through the Strait of Hormuz materially increase since the war began.
This means that the fuel and supply chain pressures that have been building since late February are not temporary disruptions, they are here to stay for the next quarter at a minimum, and potentially much longer. Businesses that are still treating this as a short-term blip and deferring hard decisions are running out of time.
If you're running an SME, here's what you should be doing right now:
💡 Stress-test your cash flow. Model fuel and input costs staying at current levels (or higher) through to the end of the year. If the business doesn't work at $3+ diesel, you need to know that now.
💡 Cut discretionary spending early. It is much easier to cut costs when you have runway. Cuts now preserve optionality later.
💡 Renegotiate supplier and customer contracts. If you're absorbing cost increases that you haven't passed through, have that conversation now. Renegotiations take time and the sooner you start, the sooner you can pass on the increased costs.
💡 Talk to your lenders before they talk to you. Lenders are offering deferrals and restructured facilities now, but only for businesses that go and ask for them and can demonstrate viability.
💡 Get on top of your ATO position. The ATO is offering more generous payment plans and easier GIC remissions at the moment. If you're behind on lodgments or carrying a growing tax debt, take advantage of the window while the ATO are offering more leniency.
💡 Ask the hard question. If your business was marginal before the fuel shock, then the current supports aren't designed to save it. Getting advice early gives you more options. If you’re already in a hole, this might be the time to stop digging.
It is far better to plan for a long disruption now and be wrong, than to be optimistic and get caught out if the crisis drags on.
