The Government are talking about a potential second lockdown. As much as we don’t want it to happen and we are not sure it even will, we need to make sure that you, our clients are prepared for this should this happen. We have been there for you every single day since the start of the pandemic – when we went into a national lockdown, we provided plenty of free advice and even completed ALL furlough claims at our cost, and we don’t plan on going anywhere!!
Please note, that if you will need any kind of finance banks WILL require up to date accounts, management accounts and cash flow forecasts at a minimum so PLEASE GET ALL YOUR INFORMATION IN TO US AS SOON AS POSSIBLE, so we can get your affairs up to date and in order.
We have put together everything you need to consider right now to prepare your business, should another lockdown happen. If you need ANY kind of support, our team are here to support you the whole way!
Consider and improve your cashflow – Cashflow forecasts
This is probably the most important thing to do!! Keeping the cash flowing is always important for a business and even more so during a crisis. Local lockdowns could see businesses facing recurring temporary shutdowns, experiencing a fluctuation in demand at different times of the year alike seasonal businesses. For these types of businesses, it is critical to ensure they have the cash reserves required to continue operating during the “off-season”. Get our free template HERE to complete weekly and/or monthly cashflow forecasts.
Businesses should explore how they can minimise outgoing payments, whilst maximising cash coming into the business. Some key considerations are:
- Are you allowing too long time periods to chase overdue debtors?
- How important is a persistently late paying client? Some strategies to minimise late payers:
- Increase the price to meet extra costs of late payers
- Decide not to trade any more with that client
- Give a discount for early payment
- Offer staged payments
- Are you keeping too much stock?
- Trade creditors – are you paying too quickly?
- Do you have suppliers who require short payment terms? Can you find alternative ones with more favourable terms?
- Is your invoicing timely and accurate? Remember that any errors in the invoicing process can result in payment delays
- If labour is a significant cost in your business, consider the ability of putting staff on the ‘job support scheme’ that will subsidise employees for part-time work. It will start on 1st November and run for a total of 6 months. During the time the employee is not working, the government will pay them a third of their equivalent wages, and the employer will chip in the other third. Further to this, the Government announced the Job Retention Bonus, awarding £1,000 per staff member who were on furlough and are kept on until January 2021.
- Does your business ask for customer deposits? Are these used to fund the business? In the event of a shutdown you should have the cash reserves required in case you have to repay these.
- Can you ask customers/clients to “pay it forward”?
- Are there any other sources of income generation you can leverage during the “off-season”? The current lockdown saw many businesses diversify and re-imagine their offering. Are there opportunities to pivot? Can you offer your services virtually? Can you offer click and collect? Can you offer a delivery service?
Securing additional finance during a second lockdown
The government has introduced a raft of temporary measures to support businesses, including the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS), but it’s unknown whether this type of support will be available in the event of a second lockdown. Our Corporate finance division have raised over £5 million during the last lockdown and are here to help you attain any finance necessary, but now is the time to look at your options.
One way to protect your business from failing if there’s a second wave of the pandemic, is to seek additional financing as a pre-emptive measure. Depending on the type of business you run, and its industry, there may be a range of options open to you to increase your working capital reserves.
Selling assets of value that aren’t essential to your business, or using them as part of a sale and lease back arrangement, can generate a lump sum of cash to protect your business from failure during a second lockdown. Professional assistance is vital during these unprecedented times, however, and with many businesses failing due to coronavirus, a potential second wave could cause further significant financial damage to many organisations.
Nordens have won the Global Turnaround Advisory award for the last two years running and are one of the UK’s leading rescue and recovery firms. We offer free same-day consultations in complete confidence – so please contact us for reliable independent advice.
Understand the new customer needs and communicate with your clients
Communicating effectively with your customers has been and will continue to be a key consideration during the pandemic. In the event of a temporary local lockdown, you will need to respond quickly and ensure your clients are aware of any last-minute changes that have had to take place within your operation.
- Have you had to change your hours? Remember to update all your channels (website, online listings, adverts and social media platforms)
- Have you switched to delivery, takeaway or click-and-collect?
- Do you have to cancel bookings? You will need to inform your clients and customers in a timely manner.
In addition, it is crucial for businesses to understand how the pandemic has shifted customer values to be able to restructure their marketing approach, adapt their messaging and successfully reach their target market. We can help you with an in-depth guide to marketing your business during a pandemic, please let us know if you require this!
Assess the risks in your supply chain
Undeniably the coronavirus lockdown had a considerable impact on supply chains on a global scale, which in many cases halted production entirely or increased lead times. Businesses should review the risks that a new lockdown could pose to their supply chains and take appropriate actions to alleviate the impact.
In the event of a second wave on an international level, supplies from outside the UK could once again be difficult to source. Business could therefore consider shifting to alternative local suppliers or even explore opportunities to design and develop parts in-house which would minimise risk in the event of a localised lockdown. Businesses will also need to establish a plan on how to best manage and communicate with suppliers if another lockdown takes place. For example, if a local lockdown is enforced, and your business is required to close again you may need to freeze or cancel certain orders. It will be important to know your suppliers’ policies to avoid additional costs and ensure you have the cash flow required to continue operating.
Review and strengthen your systems and IT infrastructure
When lockdown was enforced in mid-March, most businesses around the globe had to shift their workforce to remote working. However, at the time, it was considered a temporary solution. If localised lockdowns become the norm, businesses should seek to review and optimise their IT systems to support the long-term sustainability of working remotely.
Equally important to upgrading your systems will be staff training. Businesses should further invest in training their workforce on how to best use the systems implemented to work more efficiently and increase productivity. Moreover, when reviewing systems, businesses should remember to consider cyber-security and ensure they educate staff on becoming more cyber-crime aware.
Businesses in sectors such as manufacturing can also consider opportunities to automate processes and procedures on the shop floor. Manufacturing SMEs interested in implementing technology software or hardware can make use of Nordens digital transformation division and can assist you should you require any assistance becoming more digital and automating your systems and processes.
Upskill and cross train the workforce
During the past few months, businesses will have developed a good understanding of which business functions were the most impacted by the pandemic and subsequent lockdown and required additional support. To ensure business continuity, employers should look to cross train the workforce to maximise flexibility and be able to redeploy staff as needed in the event of another lockdown.
To better understand the skills and experience within your team, businesses can conduct various skills audits. These visual tools enables leaders to identify skill gaps as well as areas where critical work is reliant on a single person and could pose a risk to the business if a leave of absence was required (e.g. need to self-isolate due to experiencing coronavirus symptoms or instructed to do so by the NHS Test and Trace service due to having had close contact with someone who tested positive).
Support staff mental health
Employee mental health and wellbeing should be at the forefront of all conversations relating to planning and preparing for a new lockdown. If businesses are required to shut once again and employees are called to fully return to remote working this could significantly impact their mental health. Returning to a new lockdown could feel like taking a step backwards and could be demoralising and a source of anxiety for your employees.
Nordens can provide you with a wealth of information to help you manage employee mental health during this period and includes a library of local, national and international support services.
Company Voluntary Arrangement
A Company Voluntary Arrangement is one of the possible exit routes from company administration, but can also be undertaken in its own right. A CVA is a legally binding agreement that allows your company to make one repayment each month, and this is then distributed to creditors that voted in favour of the CVA.
Eligibility depends on the viability and makeup of your company – whether you own assets of value, for example, or your cash flows were relatively predictable before the pandemic – and if it’s deemed viable for the long-term by a licensed insolvency practitioner (IP).
Company Voluntary Arrangements generally last for five years – during this time your creditors cannot contact you or take legal action, and all interest and charges on your debts are frozen.
- Restructuring business operations, such as selling assets and cutting costs
- Restructuring debt within a new formal arrangement
- Selling the business as a going concern, although the state of the economy may make this option less likely
- Voluntary liquidation if no rescue plan is viable
Our award winning business turnaround team can give you ANY information you need to know about this.
Should you require assistance preparing your business, contact us on 02085300720 or email businessdevelopment@nordens.co.uk We’re here to help. Look out for our next article with more lockdown preparation business support.
