The Budget scheduled for tomorrow (Wednesday 11 March) looks set to be a defining moment in the Government’s handling of the Covid-19 global outbreak.
While many business and public health ‘experts’ have to date been advising a common-sense, ‘carry on’ approach, the threat to the economy is real.
SMEs will be on the frontline in dealing with this unprecedented challenge. According to the Federation of Small Business (FSB), SMEs account for three fifths of employment and around half of turnover in the UK private sector.
Wage subsidies and delays in tax bills are two areas which have been mooted for possible measures in the budget.
SMEs are facing a myriad of issues at this challenging time and need all the help and support they can to protect against business losses and ultimately to protect jobs.
Here’s a breakdown of the key areas you should be considering now and what you can do to mitigate long-term impact:
Staff sickness/remote working scenarios
Your people and their welfare should always be a priority. If you haven’t already make sure you have spoken or written to your staff team with advice on what they should do. Base this on official information from channels such as the NHS or Government portals or your own industry membership bodies. Do not take information from social media channels and online sources which have been rife with rumour.
Make sure your remote working policy is robust, that your IT infrastructure can cope with homework demands and that staff have the equipment and direction they need.
Financial planning
The other main priority area which business owners will be concerned about is cash. If companies are faced with a period of time when staff sickness has increased or sales decline the end result is the same – there will be less cash coming into the business and more pressure all round.
Review your cash flow forecast for the next three months based on what you know will be coming in and seriously consider the impact that any slow down or loss of business combined with staff sickness may have. What is your available capital position?
Plan ahead now for any potential financial pressures and look at the sources of capital available to you. You may have access to an overdraft or credit card – consider if these are robust enough for you and look at the cost implications of unplanned borrowing.
One of the most flexible ways to access funding is through invoice finance – this means you can release cash tied up in invoices before they are due. This also helps if your clients or customers are struggling to pay you on time.
Consider what would happen if a customer or client cannot pay you due to their own business pressures – do you have protection in place? We offer all clients ‘debtor protection’ which covers default and delayed payments of five months or more.
Supply chain
How robust is your supply chain? What countries do your customers do business in and how could coronavirus affect them? Some sectors such as travel are already facing a huge challenge – consider your own industry carefully.
Speak to your suppliers and maintain open communication with them. Be aware that if they face issues, they may ask for more favourable terms or extended contracts to fulfil their own orders to you. Good relationships with everyone you do business with is paramount; you cannot put a price on commercial goodwill.
New business pipeline
How is your service offering or product range likely to be affected? Look at ways you might be able to diversify, offer added value services, extend contracts or build closer working relationships with your customers. Make sure you keep an open dialogue with them as with the previous point.
Once we enter a recovery phase (and we will) start planning ahead for this now – you want to be in a good position to take advantage of returning commercial and consumer confidence.
Overheads / cost control
Now is the time to review where you are spending money. Are there quick savings you can make, unnecessary subscriptions or contracts coming to an end may mean you can shop around and save some money. Every little helps – regardless of the current climate, this is an exercise you should routinely do a couple of times a year. Any savings will take the pressure off your cash flow.
Government measures
Keep updated on the news and take any relevant action in your business; advise staff and customers where appropriate and above all, take a commonsense approach. Don’t panic but do be mindful.
Company culture
Finally, back to people. What are you doing to reassure staff who will themselves be feeling unsettled and anxious?
While you can’t run off and book a company-wide awayday at the moment, you can think about ways to facilitate regular communication if teams are working remotely. Consider twice daily updates or a weekly video call for staff to ask you questions or even just in lieu of a social to talk about their week and share experiences.
Boosting and investing in morale will stand you in good stead in the long run and employees will appreciate a collaborative, open and transparent approach through this tough time.