What options do you have right now?
Nearly half of the respondents in the latest survey (44%) said that their financial reserves would last them less than six months.
Even with the help of various support mechanisms such as the Coronavirus Jobs Retention Scheme (CJRS), cash grants and business rates holidays, they still forecast that they’d be unable to pay their bills by the end of the year.
27% said they’d be able to last beyond this period but another 24% said they don’t know how long they could survive. A further 4% admitted that they had no cash reserves at all.
So there’s the obvious financial imperative to reopen and restart trading but it’s not going to be business as usual.
Businesses are going to have to prepare for the permanence of some changes that have come about in the past few months.
A joint survey between O2, ICM and YouGov found that 45% of workers expected to continue to be able to work flexibly and remotely once the lockdown is lifted.
81% expected to be able to work remotely at least one day a week and 33% for at least three days.
The flipside is that people have started to forget what the usual working environment is. 30% of respondents have admitted to feeling lonely and just over a quarter said they mostly missed socialising with work colleagues.
What kind of world will companies be facing when they are free to reopen their doors?
Some industries may see an immediate upturn in business back to comparable levels before the lockdown was introduced but others could be living with the effects and changes for years to come.
It’s hard to imagine the restaurant and hospitality industry enjoying full-to-capacity dining rooms this year or even before a vaccine is developed and widely available.
Packed dance floors at night clubs or sports events with thousands of spectators might remain a memory of the past – and one that a new generation of consumers won’t want to recapture or revisit.
This is all without factoring in any possible prolonged economic downturn or reduction in the public’s discretionary spending. Less money for purchases means less going to businesses that badly need it and this deflationary chain reaction could prove to be the death knell for entire industries.
It’s hard to see how cruise ships or airlines could survive in the medium to long term if they scaled back their operations to mirror the scarce and expensive prices experienced in the “golden age of travel” in the first half of the twentieth century for example. Spas and massage therapy that function on physical contact will find it hard to function and it might finally be the end of the food buffet.
So what practical decisions can a reopening business make to immediately improve it’s position?
- Negotiation – Even if they aren’t imperative to survival, now is the perfect time to negotiate with suppliers to see if you can gain improved terms on your deals.
Extra time to pay, improved credit facilities or the chance to build a stronger relationship with your suppliers is one you should take.
- Business plans and forecasts – now is the time to look ahead for the next few months until at least the end of the year and set out the financial reality of the business.
You should update your business plan too to reflect this – not only will it give you a clearer picture than predictions made before the Covid-19 pandemic but you would use this to obtain any additional finance from this point forward too.
- Honest and clear communications – Honesty is always the best policy and with the past few months underlining how little time we get to spend on this planet, there has never been a better time to confirm that you will always be clear, honest and straightforward in your communications.
Whether it’s with your suppliers, customers or staff – they will appreciate that you value them enough to be truthful and you won’t have to backtrack or shift your position to cover previous inaccuracies.
- Insolvency advice – Not every business is going to come out of 2020. It doesn’t matter how successful you were BC (before coronavirus) the economy and consumer behaviour is going to change in imperceptible ways which might fatally undermine even the most previously profitable and well-ran business.
Company Voluntary Arrangement, administration or liquidation might be the logical path to take to enable a business to close quickly and efficiently before a new one can be formed better equipped for the new marketplace.
If there’s one positive that has come out of the uncertain economic landscape we’re facing then it’s that more businesses are beginning to understand and recognise that administration and insolvency could be the saving grace for their company and staff.
As well as being an opportunity to restructure the business so it has a realistic chance of prospering, administration provides a vital breathing space from creditors to allow business owners and directors to carefully plan their response.
The easiest first step for any company interested in reviving and revitalising itself is to get in touch with an expert for advice. Specifically, a BusinessRescueExpert.
We’ll arrange a convenient, virtual initial consultation to discuss your situation and plans then work with you to come up with the best way forward. The sooner you get in touch, the sooner we can get to work on your goals.