For many businesses the Doomsday scenarios touted at the beginning of the Lockdown simply have not materialised and it has been business as usual for some and even improved business for others, which is great news. However, are we approaching the point where things are about to get a whole lot worse? Figures show that businesses were planning over 300,000 redundancies in June and July and that is only the figures for businesses that intend to make 20 or more positions redundant, so the actual figure will be much higher. There are also worrying increases in infection rates again with the clear indication being that the hospitality sector will be shut down again before schools are closed. Add to this the closing of the furlough scheme, CBILS and Bounce Back Loans shortly ending, and it is not looking promising for the economy, and that is without factoring in the rhetoric that is currently ramping up over the Brexit Trade Deal, or not!
So what can be done by businesses who want to manoeuvre themselves into the best position possible to survive any further downturn? The old adage of hope for the best and prepare for the worst is possibly the best mantra to follow at this time. We simply do not know how things are going to turn out, whether in the short, medium or long term. Obviously, the Government funding schemes remain available until end of September for CBILS and beginning of November for Bounce Back Loans. These schemes are there to be used and no one is going to look very clever if in 6 months their business has failed but they can boast they didn’t borrow any money! You will though need to demonstrate a business purpose for the loan when applying.
Cash flow forecasts
If you haven’t been doing so to date you definitely should now be running regular cash flow forecasts based on several different scenarios. In this way you can effectively stress-test your business. It is obviously impossible to predict what revenue your business will generate over any length of time but if you at least know at what levels you are going to start experiencing problems then you will be able to identify the onset of difficult times earlier than if you have taken no steps to assess your business’ weak points. Provided you prepare a detailed enough forecast, this is also a good way to identify further potential opportunities for streamlining your operations, whether immediately or as the need arises.
Early adopters will prosper
Keep an eye out for opportunities. If some parts of your business are doing better than others try and understand why and then look to exploit it. Involve your workforce in your search for such opportunities and listen to any ideas they may have whether it be for streamlining, efficiencies or diversification. The people closest to your processes may be the best ones to devise improvements.
Keep close to your customers and clients and understand where they are up to both in terms of putting business your way and in terms of paying your invoices. Both are crucial and having early warning of problems with either or both could be crucial in enabling you to take mitigating action.
Finally, remain positive. It is all too easy to fall into the trap of “it is all going to go wrong no matter what!” That isn’t a given. There will of course be casualties but don’t let your business be one. If your business has survived this far it can continue to survive and possibly even prosper, provided you stay focused on the important issues and maximise the opportunities there will inevitably be. Even when it looks desperate there are still options to rescue a business and there are various business rescue procedures and insolvency procedures that can be accessed to help save or resurrect businesses. Hopefully, it won’t come to that but if you do need help understanding what the options are and how they work then we can make sense of it all for you.
Having trained in-house at a UK Plc., Richard brings added commerciality to the legal analysis he provides. To contact Richard, please call 01244 354 801 / 07894 562262.