The Covid-19 measures taken by HM Government to protect the NHS and the UK population’s health has inevitably had an adverse impact on businesses to varying degrees. It has been a very busy few months whilst businesses have sought to adapt and safeguard their positions for the future.
Businesses have sought to minimise the impact by employing HM Government support measures, reducing overhead costs wherever possible and preserving cash.
But now that lockdown measures are being eased and HM Government is scaling back the business support measures, what should businesses now be doing to secure their futures and maximise profitability? Whilst crisis like the one currently being experienced can be hugely damaging, it can also open up potential new opportunities for those businesses nimble enough to adapt when competitors don’t.
We set out below 5 strategies to seek success in life after lockdown:
1. Establish what changes need to be made to your business - think about how to safeguard employees and customers whilst ensuring the business can continue to operate viably. You should undertake a Covid-19 risk assessment for your business and be able to identify the cost implications of introducing PPE and hygiene measures. There is a useful assessment toolkit created by the Health and Safety Executive here.
2. Look for opportunities to adapt your business to gain competitive advantage – To coin an old phrase, never waste a good crisis. There are first-mover advantages to be had. Businesses which are nimble and can adapt will establish differentiators for success over and above their competitors. Look for new products and services to provide additional revenue streams. Review your customer book and consider terminating (subject to terms) unviable contracts.
3. Undertake scenario planning – continuing social distancing rules will inevitably continue to impact on your business’ ability to trade and generate revenue. If your business trades in the Hospitality, Leisure or Retail industries or is directly customer-facing, consider to what degree reduced footfall will affect its revenues. Prepare forecasts to identify whether the business can cover its overheads and identify your break-even point, which is likely to have risen due to additional PPE/hygiene costs associated with traditional ways of undertaking business. Preparing forecasts will be challenging given the uncertainties. Continually review trading results against forecast, adjust your forecasts accordingly, identify loss-making activities and consider restructuring options to remove the dead wood. Also, consider the position of those businesses in your supply chain and of competitors to ensure supply chain resilience and to identify vertical or horizontal merger or take-over opportunities.
4. Identify your business’ working capital needs – The lockdown will likely to have depleted its cash reserves and therefore you need to ensure it has sufficient working capital to meet its commitments. A cash flow forecast will help identify the cash needs of your business and the likely timing/quantum of any peak cash requirement. If a cash shortfall will arise, consider financing options including Bounce-Back Loans, CBILS, grants, and equity-raising to avoid it running out of cash..
5. Plan for repayment of deferred liabilities – The HMG Government support measures have enabled businesses to preserve cash by deferring certain liabilities as well as taking on new ones. Check your business can repay these liabilities when they fall due in the future. Produce a cash flow forecast, prioritising essential payments and speak to your suppliers to ensure they remain supportive of proposed payment dates. Communication is key, so ensure your payment plans are conveyed to your suppliers and other creditors.
Moore South are well experienced in helping business navigate their way through Covid-19.
We would be pleased to share our knowledge to inform your decision-making over the coming months and beyond. Please get in touch if you would like a no-obligation discussion regarding your business and its options to achieve success.
For more Coronavirus articles and resources for businesses and individuals please visit our coronavirus hub.