By Keith Tully
As lockdown measures across the globe ease and non-essential businesses return to the shop floor following the Covid-19 induced lockdown, determining the next step to achieve the financial recovery of your business may be challenging due to the detrimental lasting effect on economies worldwide. We take you through a roadmap detailing key factors which should be considered post Covid-19 to repair and replenish your business following the recent turbulent period of trading.
One of the first steps to take will be investing in the enforcement of post-Covid-19 infection prevention measures as public health continues to remain high on the agenda. As business operations resume, so will financial obligations which may have been temporarily paused, reduced or deferred as a result of emergency Covid-19 response measures. We walk you through how to get your business financially on track after the storm which continues to threaten the lifeline of businesses across Europe, writes Keith Tully of RBR Advisory, business turnaround, liquidation, and Covid-19 business support specialists.
Accessing financial support, emergency schemes and incentives
As a response to the coronavirus pandemic, countries across the world have established support schemes as scaffolding for the economy until business resumes as usual. Support measures have been introduced to compensate businesses for loss of earnings, emergency finance has been made available to help SMEs survive the effects of the pandemic and loan affordability has significantly been reduced to make business funds more accessible.
A myriad of European countries announced relief measures to help businesses boost capital, such as a VAT reduction for the hospitality and food sector in the UK, Italy announced a VAT payment delay until later this year and a cut in late interest charges in the Netherlands.
By claiming grants and accessing finance through support schemes to protect the health of your business, you can earn extra breathing space to adapt to the post-Covid-19 trading environment.
Securing commercial finance facilities
Your reserve funds will typically mirror the size of your business, so if you are a small to medium company, it’s vital to take commercial finance into serious consideration as if cash flow is quickly dwindling, it could trigger a cycle of financial difficulty and jeopardise the health of your business. Approaching a commercial finance provider, such as a specialist lender or for a loan can unlock much-needed capital required to safeguard your business.
By boosting the capital already available, you can fulfil immediate expenses, such as utility bills, rent, property maintenance, debt to trade suppliers, outstanding credit, replenish stock and purchase necessary resources required to introduce social distancing measures to your workplace.
Increasing income funnel
If you’re able to increase ways of generating income, kick start this early to help drive a regular income stream to your business, such as establishing a local food delivery service for your organic food shop to continue providing services on a regular subscription basis to loyal customers. If you operate a warehouse and you can spare non-essential areas, advertise this on a rental basis to one-man bands, sole traders and micro-businesses to generate extra income from space which would otherwise go unused.
As a response to stockpiling, reducing cross-contamination and making products easily available to vulnerable groups, such as the elderly and also key workers, supermarket giants serving UK consumers; Morrisons, Marks & Spencer and Asda created the ‘Essential Food Box’ for collection and delivery. This is an example of increasing income during the pandemic which in turn, also assists in strengthening brand image due to the forward-thinking and morally strong nature of the initiative.
If you’re struggling to fulfil consumer demand following the shutdown of your business during the coronavirus lockdown, hire temporary help, such as a contractor to fulfil orders and get back on track. By doing so, you can deliver your service seamlessly and resume trading as normal after tackling this hurdle.
Revisiting budget allocations and overheads
Upon reviewing your budget allocations, you may need to streamline your outgoings by reducing investment in certain areas to balance out any loss of income during Covid-19. If you own a physical shopfront, you will have to comply with new measures requiring you to purchase the likes of an appointment system to limit the number of unexpected customers in your shop at any given time. If you own an office environment, you may be required to fit each desk with a screen guard and provide hand sanitisers.
The rules and requirement for each sector will vary so it’s vital to forecast upcoming expenses and any changes in customer behaviour which may require you to adapt and further invest in your service.
Communicating Covid-19 safety measures
Despite official trading guidance, your business may decide to remain closed as you await the return of key staff due to health vulnerabilities. Once trading resumes, share information on your social distancing policy, such as floor markings and protective screens to give nervous shoppers the confidence to shop with your brand. If you are in the export or import trade, you must share this information promptly as there will be significant variances in Covid-19 guidance depending on the country in question. As a result, you may face extensive delays and be required to enforce specific measures to be able to trade with the end party.
Businesses across Europe are using Covid-19 inspired messages to share a united vision and communicate corporate social responsibility (CSR) initiatives to consumers, such as food bank donations, delivering food parcels to disadvantaged community members and assisting the elderly during the pandemic. This adds value to consumers during this uncertain period as it may later be converted into paid custom as a result of the CSR work.
Depending on the financial health of your business, many of these rescue measures can be self-imposed or executed following seeking professional advice. This unprecedented period has left no industry untouched and continues to rock the boat for workplaces as it’s likely that the ‘new normal’ will consist of a shift in trading standards and consumer behaviour, revealing a newfound resilience for your business.
About the Author
Keith Tully is a partner at Real Business Rescue, part of Begbies Traynor Group, and specialises in advising businesses in distress on restructuring and turnaround solutions. He has over 35 years’ experience in the insolvency sector.