1. Delay capital expenditure
Given the precariousness of the COVID-19 situation, gym owners should carefully consider any investment they make in capital equipment until the current circumstances improve. Although, understandably, some business owners see this as an opportunity to invest in new machinery to position for the rebound and to create a competitive advantage in the future.
As part of its COVID-19 stimulus package , the Australian Government has provided an incentive for businesses to invest in capital equipment by increasing the instant asset deduction threshold to $150,000 and raising the turnover threshold to $500 million. This new concession applies to new or second-hand assets first used, or installed ready for use by 30 June 2020.
New Zealand’s Ardern Government has also announced its own measures, including wage subsidies for businesses impacted by COVID-19. NZ-based business owners should spend some time getting up to speed with what’s on offer, and how you can go about accessing support if eligible.
2. Keep your financials current
Make sure that your financials are kept up-to-date. This way, you can monitor profitability and overheads in real time and make quick decisions based on accurate data.
3. Cutting bricks & mortar overheads
By cutting discretionary overheads, gyms can increase savings.
Things we have turned off:
- Facebook and adwords advertising for gym memberships and face to face PT
- computer support, phone answering services
- loan re-payments, rent
- staff wages for group classes, team meetings
Things we have kept:
- CRM and email marketing software so we can stay in touch with members
- Facebook ads for list building, blogs and virtual training
- Email marketing software
- Business coach
If staff wages are a significant cost line in your business, consider ways of reducing that to avoid layoffs.
For example, consider reducing contract labour and redistributing work to permanent staff. Also, you might offer reduced working hours, if possible, or encourage staff to take available leave or leave without pay to preserve cash flow.
NB: Be cautious when considering payroll cuts and be sure to check what employer subsidies are available to you before making a decision. If you can maintain the headcount, it will pay dividends once normal trade conditions return.
4. Debtors management
- Chase money owing from memberships overdue
- Be flexible with member contributions during this period
i.e. – $20 a week for virtual training or $15 if that’s all they can afford.
5. Creditors management
- Contact your suppliers and seek payment extensions
- Contact your landlord and ask for payment extensions, rent reductions or a pause on your rent.
6. Build alternative revenue streams
- Equipment rental
- Virtual training
- Virtual training for kids
- Outdoor PT
- Running programs
- Nutrition consults
- Dog walking
- Food delivery
7. Stay on top of tax obligations
It’s important that your tax obligations, including any special considerations for payroll and so on, are paid correctly and on time.
In Australia, this may mean becoming more familiar with STP legislation or simply keeping your BAS payments up-to-date. In NZ, you’d be looking at Payday Filing or checking employee leave entitlements.
And if you’re unable to pay on time, enter into payment plans with the ATO for tax and BAS (Australia-only) or, in New Zealand, you’ll need to seek advice from the IRD.
For example, in Australia the ATO has announced support measures for businesses impacted by COVID-19, which includes payment deferrals, changing quarterly GST reporting cycle to monthly reporting to get quicker access to GST refunds, and varying PAYG quarterly tax installments.
8. Take advantage of government support
Governments across the world, including Australia and New Zealand, have announced stimulus measures to support businesses during this crisis where the stimulus is in the form of subsidies and tax breaks to keep businesses open and people in jobs.
The best way to stay informed of the various stimulus packages across Australian and New Zealand tax jurisdictions is to follow the MYOB blog, as well as heading straight to the source at the ATO and IRD websites.