Business Impact – What To Do First
We are facing a global pandemic the likes of which none of us have ever experienced in our lifetimes.
Coronavirus (Covid-19) has brought the entire world to an almost standstill. The impact on our way of life was immediate and gigantic. Saving lives and protecting our health service is first and foremost, but there is no doubt the economic impact comes next.
First and foremost, you need to determine whether your business is deemed “essential” under the government guidelines. This will determine whether or not you can continue to trade as normal, observing new ‘social distancing’ and health/safety measures as necessary.
As a business owner, how are you dealing with the downturn brought about by the government measures? Was you business prepared at all for such an event?
The truth is that most small businesses will be greatly impacted by the effects of Covid-19, not just in the short term. Some small businesses were surviving month to month with no cash reserves being built.
No matter what your situation as a small business owner, here is our recommended 6-step approach to getting your business stable where possible and also ready to rock once things get back to some kind of normality.
Business health check
First things first, what does your business currently look like? Try to remove any emotion when doing this review. Simply look at the following factors:
- How much money do you have in the bank now?
- How much is the business owed by customers?
- From the money owed, how much is likely to be paid in full, part paid or maybe not paid at all?
- How much money is owed to suppliers? Who are they and how much are they expecting to be paid this month?
- Do you have any excess stock that can be sold quickly or at reduced prices just to shift it and create cash? Can it be sold online?
- Staffing – this is the sore point for most of us, but talk to your team ASAP. If needs be, talk about reduced hours, temporary lay offs, possible redundancies etc. Don’t forget though that you may want to have your team with you all the way and together at the end of this process, so be kind and fair. They will respect you for it in the long run.
Business cash flow
Now the important part. Taking your current bank position, start to plot money in and out of your business for the next 4 months (at least).
We have created an excel template to allow you to do this easily along with a short video training guide to allow you to make a start on it yourself. Tweak the categories as you see fit.
To grab a copy of the excel forecast and video guide, join our Facebook Covid-19 group here:
Cut your outgoings
There are quick wins to be had here, get on the phone and start speaking to the likes of:
- Your bank – ask for any monthly loan or mortgage payments to be deferred for at least 3 months. This includes your own home mortgage if applicable.
- HMRC – contact the Covid 19 support line (be prepared to be on hold for a long time, so work on other stuff whilst waiting on hands free, that’s what I am doing as I type this!). Ask for deferral of PAYE, VAT and any other tax payments that are due. Be aware that wait times are long.
- Vehicle or plant finance (such as HP or lease) – it seems to be the case that all finance companies are allowing a 3 month payment break. Contact them now and get this agreed.
- Cut out any unnecessary outgoings – business and personal. For example, most households and businesses have subscriptions they rarely use, so think about shaving those (although you might need Disney Life more nowadays!)
- Maintain the essentials – shopping, heating, electric are the obvious ones, but if needs be contact your utility provider to agree reduced payments. Main thing is this – PAY SOMETHING INSTEAD OF NOTHING – we all have to come out the other side of this situation and paying no one at all won’t help things.
- Speak to your landlord about business and/or home rent to see if a reduction is possible (if absolutely necessary)
Bear in mind that you will only be able to contact HMRC if the debt is live, so you need to keep filing your returns to get this deal agreed. Don’t contact HMRC about tax until two weeks before the payment is due. File returns on time and as early as possible.
There are a range of government support schemes in place to help business owners including:
- Self Employed Income Support Scheme (SEISS)
- Coronavirus Job Retention Scheme (CJRS)
- Coronavirus Business Interruption Loan Scheme (CBILS)
- Business Support Grants (for designated business rate payers)
- Deferral of tax and VAT payments (via HMRC)
Refer to other sections of our guides to check the finer details of each scheme. Take advice on what is applicable to your business. Get help from your accountant / advisor. Find out how much you might be able to claim and when funds expect to be paid out.
You can now see clearly if you need to consider taking on a new loan for the business, a temporary overdraft perhaps.
Our advice is to avoid debt finance where possible. If absolutely necessary, try accessing funding with your own bank first under normal lending terms as this would appear to easier for banks to process than accessing new loans under CBILS.
Talk to your accountant/advisor about how quickly you can access funds. Your own bank might be the best option in terms of speed. There are other options too such as Funding Circle, Iwoca, Capitalise.com, Satago, Capital On Tap………we can point you in the right direction.
Build For The Future
Start building the business that you want by using an extra time you have now to change/improve your processes, innovate with new products or services, think about other ways to generate revenue, build your online presence. You need to be seen NOW in order to be ready to succeed in 4 months time and beyond.
Consider taking some more training in areas such as marketing or finance.
Think about how you can deliver your goods and services to your customers and clients amidst the current climate. Building an online portfolio and delivery method now is not something temporary. The aim here is to build something that will keep generating revenue for your business on an ongoing basis, even when the shop shutters have been rolled up again.
Taking action trumps panic, and speed trumps perfection………
TAKE ACTION NOW, PLAN FOR THE FUTURE, KEEP WORKING TOWARDS GETTING THROUGH THIS!
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