For those reading this who think they are not going to be badly affected think carefully as the key to getting through this with a business at all will be down to early action and cash preservation. Most businesses now should have a brief “survival business plan” and we are happy to help you with that. The Government has provided a very wide range of measures to “help” businesses survive and have made a good job of “spinning” this out, but in all honesty whilst I can see how cash can be preserved through this, there will be significant damage to balance sheets at the end of this when you might then need to update your “survival business plan” before we get close to our “back to business as usual plan” and eventually somewhere in the distance our “5 year plan”.
Never has it been so important to have the finger on the pulse of your business and whilst the NHS do a magnificent, challenging and exhausting job in trying to prevent deaths from this horrible virus, the role of business owners and their teams is to try and prevent deaths of businesses which is also going to be exhausting and challenging, particularly as we are trying to do it with one hand tied behind our backs due to Coronavirus. From what I have seen of the business community and from what I have seen last week of the WD + Co team, it is evident that we have the same resilient attitude as the NHS teams and businesses have some wonderful people, so let’s start off with “we will get through this”.
So, what should we be doing in our businesses?
1) We have updated our fact sheet to reflect the most current initiatives offered by the Government and this is attached. There is plenty on the internet, but we wanted to pull something together into one document.
2) The most recent initiative is in the Government paying 80% of employees’ wages who are “furloughed”. I’m not sure that this is actually what The Chancellor said in his announcement on Friday evening, and as always, the devil is in the detail. I for one reached out to google to find out what “furloughed” meant and it means that “an employee is asked not to attend work for a period of time but remains on the payroll”. I suspect many businesses have a number of people that they might keep on the payroll if they could get 80% of their wages paid and have them attend work possibly in a very reduced capacity just to help the owner keep the ship afloat. That is not what this does, and I have to wonder if it will be very much help at all to small and medium businesses. I think it might be very limited.
3) There are initiatives now to help cash flow by not paying VAT and other taxes when due and this will definitely be useful and will preserve cash. The trouble is, the liability remains and will need to be paid at a future date, but that probably needs to be a worry for another day.
4) The small grants of £10,000 and £25,000 will be extremely useful for certain sectors and should automatically be paid to the business. Remember that you need to be operating from a business premise and be liable to rates (even if you get small business exemption) before you get this. So many self-employed will not be eligible as will many non-eligible sectors.
5) The Coronavirus Business Interruption Loan will be very heavily accessed I suspect, and I see us having a key role to play in unlocking this for clients. This will be the lifeline that provides longer term cash to businesses and will be the biggest help in survival of businesses who suffer losses through this period. It is not ideal as your business will have to suffer losses or heavily reduced profits and after this is over start from a point with a weaker balance sheet and heavier debt. The only upside is that this can be spread over a 10-year period if that is agreed by the lender. Many businesses should be looking at this and getting in early. You get 12 months interest free, so even if you end up not needing the money after 12 months then you could repay it and you will have had 12 months free cash to at least give you an insurance fund through this.
6) The self-employed and some small businesses have not been covered yet by Government and perhaps this announcement will come this week. Let’s hope it is something like 80% of last year’s profit because these guys deserve support at this time as they have often risked everything for very little reward.
In summary, please get your “survival business plan” drawn up even if you don’t think at this stage that your business will be greatly affected because chances are you will.
The business community must all work together through this and keep cash circulating amongst us as best we can.
Download our updated Coronavirus Business Support Factsheet here.