Published: 31/03/2020 By Andrew BaileyFor many business owners they are faced with the stark reality that their income has fallen off a cliff. There were no plans that could be put in place and nobody saw it coming.
Whilst the government put welcome schemes in place to support businesses it may still take some time for these to be implemented and have an effect. So, what can be done in the meantime?
Firstly the feeling of not knowing what to do is incredibly stressful and causes anxiety. You look online for solutions but you get lost in the many articles about coronavirus, government incentives, etc and what you need is practical solutions. My recommendation is to get back on top of those things that you can control.
If you are worried about your finances have you critically assessed them? You need to dig into your financial figures and understand them. You can speak to your accountant, but you can easily do a simple assessment yourself. Have a look at your bank statements over recent months and look at your income and expenditure. Open an excel spreadsheet and just start plugging in the figures.
You could then start preparing a cashflow over the next few months looking at best and worst case scenarios. This will show you what your true position is looking like in the immediate future. There are easy to use templates to use but contact me if you need one.
It means you are getting back in control and it helps clarify your position.
Check with your insurer or your broker to establish what cover is in place? Will the insurer support you in these circumstances?
Dealing with your expenditure
Once you have identified your expenditure and where your outgoings are heading you can think about what you can do to address your costs.
- If you pay rent you can speak to your landlord and ask them for a payment holiday. Bear in mind that landlords have bills to pay too but it does not stop you having reasonable discussions.
- If you have suppliers you can communicate with them to say that you are doing your best but need their support. Speak to them to see if they can extend your credit limit or payment period. Again, be reasonable as everyone is in the same boat.
- Your bank should support you so speak to them and request a payment holiday. If they are being unreasonable you can consider switching to another provider and re-financing on better terms.
- Talk to those that you work with whether that be staff or contractors and see if they will help support the business by accepting reduced pay or reduced hours in the short term.
- HM Revenue & Customs – if you are concerned about tax then speak to HMRC and ask for some time to pay.
- Is there any non-essential expenditure that you can stop?
Share ideas and communicate with others
Communicate with your peers and get support from people you trust. Your industry may have good sources of information or forums that you can join to get advice and share ideas.
Following some social media platforms will not always be the best use of time and focussing efforts on obtaining useful information from your peers and those in your industry is very important. You are not alone in this and many people are facing similar challenges.
For many businesses they have found that their income has fallen away completely and there is simply no easy way to resolve this in the immediate future. However, these types of events do present opportunities and as I mention above by communicating with others and sharing ideas you can sometimes come across interesting opportunities.
- My wife runs pilates classes and clearly cannot run classes with multiple people in confined spaces. She is now considering using Zoom to allow her to run online classes and perhaps she can create videos that clients can receive in the absence of classes.
- Traditional restaurants which only provided food in their bricks and mortar establishments are now looking at more deliveries and using platforms like Just Eat. Are there more opportunities given the present difficulties with supermarket supplies?
- For smaller businesses it is important to think about your loyal customer database. People are nice and they like to help others so reach out to them to see if they will support you. Long term customers clearly value your services so think about whether it is feasible to offer loyalty vouchers whereby they can purchase vouchers for a discounted price that they can use when these difficult times blow over. It generates income in the short term but does not leave you with too much of a burden in the future as it will only strengthen your relationship with your customers.
- For tradespeople I am hearing that works are being cancelled but what opportunities can the current difficulties provide. With so many people intending to self isolate and internal works disappearing are there opportunities to do more work externally and applying important trade skills in gardens and other external areas.
- For service companies such as accountants, financial advisors and the like I consider there to be opportunities. With more people confined indoors and naturally bound to their computers I believe it is a good time to embrace new technologies to drive efficiencies and online presence that will assist the business in the long term.
- I am hearing about cab drivers linking up with all sorts of other businesses to assist with deliveries of goods.
- Food wholesalers are finding that restaurants are not ordering as much of their produce so instead they are offering their food products to the general public directly which in turn relieves some of the burden on the supermarkets.
The government is taking proactive steps to support businesses but whilst there is still some uncertainty on how this will work on a practical basis and in terms of timescales I have not covered them in this article. I will review these in more detail as more information becomes available.
Don’t be shy in getting advice whether that is from friends or professional advisors. There are plenty of excellent advisors out there that realise what you are going through and will offer their support.