As the Government makes more announcements on how businesses are going to be supported during the coronavirus outbreak, it's important for business owners to have a clear understanding of what assistance they can access.
Furthermore, what this means for their business and how they can take the necessary steps to protect their business now and sustain it for the future.
Times are uncertain and there are a number of factors at play, from health to the economy. If you’re a business owner - particularly in the leisure and hospitality sector - it’s important to assess your business as it stands today and understand what it may look like over the next few months.
While the Government is offering support for businesses that need it, which is likely to be a high number, putting in place practical measures and provisions that protect your business and your people now may be a quicker route to reducing your business’ exposure to risk.
It’s an attractive alternative to waiting for clarity on how claiming Government funding will work.
Never before has the phrase ‘Cash is King’ been so accurate.
If you don’t usually prepare a 13 week cash flow, now is the time. Break it down into days or weeks depending on which is more relevant to you. Include and consider your ‘knowns’ – money due to come in (invoices you have already sent and are awaiting payment on) and money due to come out (trade accounts, wages, PAYE and VAT).
Only when you’ve done this will you know the true extent of what you’re working with. If you don’t feel confident in putting this together or you’re a mainly cash business in hospitality or retail, speak to an adviser sooner rather than later. They will be able to work with you to build a cash flow and run through various scenarios with you.
You should consider the security of your current contracts, large and small. Are they future ready and likely to continue through the outbreak, or are you counting on additional business coming through the door in the coming weeks and months? In a similar way that businesses needed to consider the worst possible scenario ahead of Brexit, the same applies today.
Once you have a snapshot of where you’re at, you can start taking mindful next steps.
Start with trade accounts. If you work with large suppliers, chances are they have larger cash reserves than yours - as well as more borrowing power. Start an open and honest conversation with them and ask about extended terms for a period that will work for both parties. This will ensure you are putting your business in the best possible financial position whilst retaining quality relationships with your suppliers.
Assess all spending and don’t be afraid to trim the fat where it’s needed.
An upfront conversation also applies when it comes to speaking to HM Revenue & Customs (HMRC) about paying your taxes. If you are concerned about meeting payment of your PAYE, VAT or corporation tax, you may be able to agree to a ‘Time to Pay’ arrangement. HMRC have set up a dedicated helpline for businesses impacted by coronavirus on 0800 0159 559 so you can find out more.
While it won’t feel like the most uplifting exercise, acknowledging the worst case scenario and taking proactive steps will also help you better prepare for an uncertain future and hopefully, there will be fewer surprises along the way than those you have planned for!
The question of levels of sustainability and resilience in your business need to be asked. Now is a good time to speak to your business adviser and get expert advice on how you can navigate the next few months. Speak to your current bank or finance provider too to discuss your situation, what can be done now and in the coming weeks. Now is the time to consider extending overdrafts or refinancing your existing assets if practical.
Given the rapidly changing and complex situation businesses find themselves in, if you forecast that your business will need additional funding over the coming months look at all your options.
The assistance the Government has outlined will help many businesses that would not usually have access to funding, but it isn’t the only solution for many businesses and investing time to plan today may save you money further down the road.