The repercussions of the COVID-19 global pandemic are likely to be far-reaching. We are only just beginning to know what the future holds in terms of recovery.
The implications for health services and the economy are likely to reveal themselves over the coming months, and business owners need to make sure that they are planning for this as best they can.
So how do we plan when we don’t really know what we are planning for? After all, nobody could have seen this coming or how deeply it would affect our way of life, our health or our livelihoods.
There aren’t many sectors that will escape from this unprecedented period unscathed, but whatever your area, businesses will have to fight hard to remain afloat.
What can be done then? How can you avoid bankruptcy and ensure that your hard-won and lovingly nurtured business continues to trade? Here are a few ideas:
Make sure you know what help is available
The UK government are continually publishing updates to their guidance about what help can be offered to help support businesses through this unprecedented time.
Make sure that you are up-to-date with what is on offer and that you are taking advantage of any schemes you may be able to access.
For example, you might be eligible to defer VAT and Income Tax payments, or you might be able to access a small business grant of £10,000 or a business rates holiday.
Make sure you have done your research to ensure that you are not missing out on the support available.
Pivot your products and services
Although we are beginning to come out of lockdown and things aren’t quite as dire as they were a few months ago, we need to be realistic about the fact that our way of life might not go back to normal for quite some time yet.
Nobody knows what the colder seasons will bring and with people mixing a lot more and schools going back, there is a lot of uncertainty.
It is likely that you have already thought about how you can adapt your offering so that your business survives.
If you are in events, can you host them online?
If you run a restaurant can you make your lockdown takeaway adaptation a permanent fixture even when you start to accept more guests again?
You never know if and when your local area might go into lockdown again, so it is a good idea to have a long-term strategy that covers all possibilities.
It’s important to look at what non-essential expenditure you could trim down or lose altogether, especially if your business is based in London where foot traffic has fallen substantially due to the pandemic.
If you’re based in the city, a London Insolvency Practitioner can take an impartial look at your business and can help you find solutions that you may not have been able to see by yourself.
You might think about a recruitment freeze or a temporary halt in your R&D plan – you can always pick these things back up at a later date.
Is outsourcing a possibility? Using freelancers and contractors frees you from a long-term financial obligation rather than taking on permanent staff.
Check your insurance policies
Make sure you check your policies. Business Interruption, Employer’s Liability or Crisis Management insurance – amongst others – could significantly mitigate the financial damage you suffer as a result of the pandemic.
Make sure you double and triple check all insurance policy documentation.
Conduct a realistic budget
This goes hand-in-hand with cutting costs and is the easiest way to see where you are spending unnecessarily; it will help you to reign in your costs and make decisions about when and where to make cuts.
It will also help you to review your assets, stock and other overheads. You can then focus on which assets are essential for your core business and which are simply aspirational.
It is best to be realistic in times of trouble. You might need to downsize your premises or sell off some stock.
Contact your creditors and look at your cash flow
Can you renegotiate payment terms with your creditors? You could come up with a payment plan that takes the edge off the next few months of financial uncertainty.
Equally, are you chasing up unpaid invoices? Are your processes water-tight in this respect to ensure you don’t miss out on payments?
Know when to ask for help
People can be afraid to ask for help because they think it means the business has failed. This is not true.
In the vast majority of cases, a way through can be found.
Early action is the key here. The quicker you act, the quicker you can start down the road to a more buoyant and resilient business.
Hasib Howlader is a licensed insolvency practitioner, chartered accountant and chartered tax adviser (a rare breed!). He has a wealth of experience in all financial matters, having cut his teeth at both UBS and PricewaterhouseCoopers before moving to direct his own Chartered Accountancy practice where he has overseen exceptional business development.