Just as businesses were ready to return to a version of normality, the delay in the final stage of the coronavirus roadmap has forced many to stop in their tracks and re-evaluate their lockdown exit strategy. With the end on the horizon, the final stretch of restrictions has required businesses to reconsider controlling their cashflow and take steps to maintain customer and consumer confidence.
Changes to plans
The delay to the lifting of lockdown restrictions has affected business across a multitude of sectors, in a variety of ways. Many businesses which had plans to adapt both their staffing levels and marketing strategy as lockdown lifts, have had to put these on hold until mid-July. Limits to customer numbers and social distancing will remain in place until at least 19th July, meaning footfall is still limited for many businesses, with a knock-on effect on their turnover.
Additional support for businesses during this last stage of restrictions would be highly welcomed by all. Job retention is a key issue for many, our key suggestion would be that the Government consider extending its Coronavirus Jobs Retention Scheme (at the 80% relief level) into August, which would give business one last helping hand to retain staff during this uncertain time.
Many businesses have been struggling with debt over the past year, as a result of the pandemic. The full business rates relief reduced by one third on 1st July, it would make sense to provide an extension of the full rate relief until March 2022. This would provide necessary support to businesses to get into a stronger financial position after a sustained period of trading, before having to pay the loans back.
The rent moratorium, designed to protect businesses from being evicted if they have been forced to close during the coronavirus pandemic has now been extended until March 2022, welcome news for many. This will allow businesses to prioritise supplier payments over rental payments, allowing the continuation of trading and giving them more breathing room.
The importance of scenario planning
For all businesses, effective scenario planning using three way forecasting, which involves combining the business’ profit and loss account, balance sheet and cashflow, covering worst, medium and best-case scenarios, is the key to putting the right recovery plan in place. For example, assessing both the short and long-term cashflow of a company can help business owners to spot critical points, such as when they might be likely to breach an overdraft facility. This enables them to take appropriate action to bridge any cashflow gaps, such as securing a business recovery loan from the bank. By planning for a number of different eventualities, directors can make informed decisions and prove that they’ve taken the appropriate steps to understand the needs of the business. As well as preparing forecasts, it’s important for business owners to fully understand their impact on the company, as well as checking that the relevant figures and margins make sense.
As well as ensuring that the books are kept up to date, regular, well-structured and meaningful management accounts must be prepared and fully understood. They should then be scrutinised, in particular to see if any cost savings can be made and to ensure the business is receiving value for money.
The customer is key
With many customers still wary about the risk coronavirus poses, an emphasis on customer safety and a customer focused approach is important to prioritise over the coming weeks. Businesses need to be able to clearly convey what steps they are taking to adhere to general coronavirus restrictions, this will strengthen a customer’s confidence and mitigate risk in the event of closure due an outbreak of the virus.
With businesses having missed many months’ worth of trading as a result of the changing coronavirus restrictions, most are facing significant financial challenges. Planning today for the lifting of all restrictions would still give businesses the best chance of maximising their trading activities when normal trading conditions resume.