What can I do to mitigate the risk to my business risk from Coronavirus?
The UK is only just starting to feel the effects of the global Coronavirus outbreak and it is very difficult to foresee how this will develop over the next few months, however, businesses should start to consider the potential impact and how they can mitigate any negative effects.
Leisure and tourism businesses are particularly likely to see a direct impact from the outbreak due to them dealing direct with the general public, so, it is important to plan for the potential negative consequences that may arise in the short term but also look at how to potentially benefit as time progresses.
A sensible starting point would be to either prepare or update your cashflow forecast for the next six months, thinking carefully about the income you are predicting in this period. This will indicate what actions you need to take; if it appears that cashflow is becoming strained during this period then you could consider the following actions:
- Talk to your bank and alert them to your concerns and ask what assistance they are able to give, which may form either a capital repayment holiday for loans or increased overdraft facilities.
- Talk to other finance providers, such as credit card providers, asset finance providers etc and see whether there is the option of reducing or delaying payments.
- Approach major trade related creditors and see what flexibility they may have in terms of reducing or delaying payments
- Open dialogue with HMRC regarding deferring tax payments that may be falling due, perhaps splitting your quarterly VAT bills into 3 monthly payments.
- Review your terms of business in relation to the sales you make to your customers and ensure that your staff are fully aware of what they say to ensure that refunds are not issued for cancellations if your terms do not offer refunds.
- Look at your insurance policy carefully, are you insured for any business interruption that may be caused?
- Think about what benefit you can derive from the situation, for example, if you are selling UK based accommodation, can you drive demand from people who are may be cancelling overseas holidays?
- Consider your stock levels carefully, do you need more or less of certain stock?
- Think carefully about your investment plans, do you still want to follow your original plans or reconsider?
- Look carefully at your sick pay and absence policies for your staff. Put together a plan of how you could ask your staff to work from home if they need to self-isolate, this might work for any finance and admin staff but naturally will not be possible for front of house and kitchen staff.
- Consider how you will be able to continue to operate if you were to have significant levels of staff absence and sickness.
- Enforce stringent hand washing policies to keep staff and customers as safe as possible.
In light of the current situation, the Government has announced a package of support for businesses ranging from supporting SMEs with payroll costs to the creation of temporary loan schemes. Summary of the main support packages announced to date.
The picture is ever changing, and it isn’t clear how matters will develop. It may not be necessary to implement any changes at this time; however, we would always advocate considering the potential impact on your business and where applicable having some exploratory conversations as noted above as soon as is possible. If you would like further advice on the above, please do not hesitate to get in touch with Colin Johnson.