Our business expert Ian Rose joins employment specialist Oliver Tasker to offer essential advice for those in charge of small and medium businesses
Worried about your business? Crippling uncertainty during lockdown is causing many directors and owners to weigh up their options. The sooner you take action, the better the outcome and there are plenty of options to suit your circumstances. Wilkin Chapman's Business Solutions director Ian Rose joins our employment expert Oliver Tasker offer up some essential advice.
Supply chain management
Look at your list of suppliers and identify non-essential spend. Bring all your bills together, analyse them carefully and understand what can be stopped or reduced.
Contact your suppliers and explain that you’re suspending services or restricting them to essential deliverables. For example, a website hosting company is placed on a low retainer for urgent work only, e.g. keeping the website running and fixing it if it goes down. Most suppliers will understand your position and will have had similar conversations with other businesses.
Ian’s top tip: “Don’t feel guilty: the only thing you can control is the financial viability of your business and these circumstances have been forced on you. We’re all in this together – and all part of a wider supply chain.”
Speed up incoming payments
Identify your outstanding invoices and chase them. Do this as soon as possible, before the customer or client limits or stops payments. Get payments online or over the phone to speed up incoming cash.
Alternative credit
Look at alternative credit facilities to give you the temporary relief you need. If it keeps the business solvent during coronavirus, you’ll be able to recoup costs when things return to normal. If your business was struggling already, this might be a sticking plaster on a deeper problem regardless of the pandemic. Short or long-term finance, particularly the current Government schemes, are usually a better option than using expensive overdraft facilities.
Negotiate terms
Essential costs are necessary, but it’s still cash leaving the business at a time when the purse strings are tighter than ever. Try to negotiate terms with landlords, utility companies and other vital suppliers. You could restructure your payments to pay smaller amounts during the lockdown or look at eligibility for a Business Rates reduction or exemption. Claim any exemptions that are available to cut down costs.
Ian’s top tip: “Renegotiate payment terms with suppliers – and perhaps agree to review them when normality returns. You can only pay what you can afford anyhow, and they may well be grateful of the ongoing business.”
Work in progress
Manage client or customer expectations. If they’ve booked you for a specific piece of work, reassure them that it will be completed when the lockdown is lifted or when your suppliers are back up and running. It might be a regular customer who you provide repeat services or goods for. Re-schedule works or appointments to maintain the customer and discourage them from cancelling altogether so your future income is safeguarded.
Your employees and 'furlough'
If you can’t afford to pay staff wages, then take advantage of the government’s Coronavirus Job Retention Scheme. It’s an unprecedented intervention from government to ensure your workers are given 80% of their salary, up to a maximum of £2,500, and kept on the payroll. It’s called furloughing. You continue paying your staff through PAYE and are reimbursed by the government.
Legally, that means your employee cannot undertake any work for the business. If you still need some labour, consider discussing part time or flexible working options with your staff.
Ollie's top tip: “The scheme relieves you of the moral quandary and financial burden of paying employees – especially those whose loyalty will be needed when things return to normal. Take advantage of it if you need to.”
Coronavirus Business Interruption Loan Scheme (CBILS)
Find out if your business qualifies for a loan under CBILS. While it was originally for the
The Government-announced amendments to the scheme recently to make it more accessible for SME’s. Seek advice from your bank or Business Rescue experts who can help you with an application for support.
If the measures above don’t keep your business afloat, it’s time to look for help. It’s not as scary as it sounds. Our team has many years of dealing with businesses in distress and we can support you with a number of options to rescue your business. Don’t worry, we’ll get to know you and your business, and help you work out the best way forward.
Company voluntary arrangement (CVA)
This is an arrangement with your creditors to reschedule payment of your debts. You reach agreement with your creditors to create a timetable to repay what the business can afford over an acceptable period. Once approved a CVA is a legally binding agreement for the company and its creditors so can provide immediate relief from creditor pressure.
Selling the underlying business
If a CVA isn’t possible, there are other options. It could be that your company is no longer viable due to being weighted down with debt but the underlying business may be viable? Think of the product or service that your business supplies. Are they valuable? Apart from the historic or isolated financial problems experienced by the company, was the product or service itself selling well? If that’s the case, you might be able to sell the ‘viable’ element(s) of the business to another company or the current owners/directors through a new or existing company. This would result in the Liquidation or Administration of the 'old company'.
Closing the company
Sometimes, closing your company and the business is the only option. We realise this is often a last resort and is often a sad time after what may be years of effort and devotion. However, it’s not the end of the world. Our dedicated team can advise on an orderly closure to remove the stress and worry. We can relieve you from the financial burden and help you recover and get back on your feet.
Contact us
For a free confidential chat with one of our Business Solutions specialists, drop us a line at Wilkin Chapman Business Solutions on 01302 320 600. Just ask.
Join us live
You can also register here for Ian and Oliver's live webinar in conjunction with Doncaster Chamber. They'll be talking about all of your options, from cash flow management to government help such as furlough. You can also ask your questions.
