How can businesses prepare to start trading again?
With Covid-19 lockdown restrictions being eased gradually, businesses are starting to plan for the recovery. In our latest Q&A, our corporate services director Judith Dugdale shares some advice for how businesses can plot a return to growth.
What priorities should business owners be focusing on?
The lockdown has affected businesses in different ways. Some have continued to trade, albeit on a reduced basis, others have had to stop completely. Anyone in online retail, or who conducts most of their business digitally, will have managed to make a good go of it during lockdown. For other sectors like hospitality and retail, the road back to normal trading will be a long one.
It’s been nearly impossible for most business owners to focus on anything other than the short term up to this point, but just like the whole world is looking towards a coronavirus exit strategy, businesses need to plot their own path towards recovery and growth.
What practically can business owners do as part of their planning?
There are many steps businesses can take now that will enable them to come out of this crisis stronger and ready to seize the inevitable opportunities.
Cash will be key to getting back to normal trading. For example, if you need to buy stock, producers and manufacturers are likely to need payment up front as they may not have the cash reserves to pay for materials and meet other production costs.
In turn, that could mean also asking your own customers for payment, or a larger part of payment, up front too. Everyone is going to have to be more flexible and understanding and good communication will be vital.
My advice is to have honest conversations with your debtors. Far better to agree a staggered payment plan that enables you to get some cash into the business immediately than to demand payment in full which some suppliers will just not be able to make.
Explain why your payment terms may need to change slightly and come to an understanding. Maintaining strong relationships with your customers and suppliers will help you make the most of opportunities.
What other things should businesses be doing to ensure good cashflow?
It’s a good idea to keep reappraising your cashflow forecasts depending on the latest outlook for your sector and what your existing management information is telling you. This doesn’t need to be too detailed but needs to cover different scenarios depending on how long social distancing measures last. We’ve produced a Business Healthcheck Questionnaire that business owners can use to aid their planning.
There are lots of tax incentives out there that businesses can take advantage of to ease cashflow. Businesses need to be speaking with their professional advisors to ensure they are maximising the reliefs available. We have produced a guide which details some of these incentives and tax planning techniques.
What other factors do businesses need to consider?
Staffing your business for the recovery will be important. Regular communication with employees will be vital. You may need to continue making use of the furlough scheme for as long as possible. If you’re bringing some furloughed workers back sooner than others, explain clearly that this doesn’t mean workers who remain furloughed are not valued – it’s just part of the plan to get everyone back to work.
What funding can help during these uncertain times?
On top of the all the government support that’s available, businesses should still consider other established lending facilities that can support them. For example, invoice discounting or asset-based lending products may be a good option for many businesses to assist them with cashflow. Your professional team will be able to help you appraise the different options.
There’s also lots of local authority business support out there, including grants and other tax breaks. Some of this was around before the pandemic, so consider all the support that’s available.