Looking for the positives

As has been said may times we are living in unprecedented times.

Much of the impact is negative - on lives, livelihoods and on mental health. We’ve all witnessed positive aspects with examples like the commitment of NHS staff and other key workers, a greater sense of community and more acts of kindness.

Many businesses continue to struggle and there is a long way to go before they can be sure of their longer term survival.

In our business too, we have faced (and are facing) challenges but there are some positive aspects which will stay with us when the immediate impact of the pandemic has passed.

I’ve been reflecting on these and here are a few:

Valuing the team

I’ve always recognised that we have a talented team. This crisis has just reinforced to me how brilliant they all are. Coping with the challenges of moving very quickly to working remotely, juggling personal lives and home schooling and doing their best to deliver for our clients, despite all the difficulties.

Embracing new technology

The enforced change has meant that we have all had to adapt very quickly to using technology like video conferencing and cloud software applications. Face to face meetings have their place but most of us realise we can have a productive meeting on-line now without having a rush hour journey in busy traffic. We can also successfully maintain a client’s books remotely and have a conversation with them about the results, without resorting to the post or having a meeting in the office.

Client relationships

The crisis has meant we have had to work intensively with many clients to help them access Government support in the form of grants, tax deferrals and loans. I believe this support and the sense that, ‘We are in this together’ has strengthened our relationships and the impact will last beyond the pandemic.

Working differently

We have all had to adapt to new ways of working. Although I miss my colleagues and the daily interaction at the office, I find I’m well-suited to working from home. I have more control over what I do and when and with less interruptions. Work colleagues have adapted too, with those home schooling or fitting in study for exams around work adjusting their hours and work schedules to suit. I can see us operating more of a hybrid system in the future with a mix of office and home working.

New markets

Although most of our clients are located close to our office we have always attracted clients from further afield. Often this has been by word of mouth or by a chance encounter on-line. I see this trend continuing now we are even clearer that we can provide a first-rate service remotely and we can easily engage with prospective clients via Zoom etc.

Freedom for the boss

I’ve been trying to gain more personal freedom from the ‘day to day’ routine of running the business for some years now. Not to do nothing, but to have space to think creatively, be more strategic, do what business owners and managers should do more of. I’ve had limited success. I’ve still had that ‘guilt’ thing that if I’m not in the office, I’m not really working. I think that’s changed. I think I know and the team know that things can function perfectly well (probably better) without me being in the office very day.

So some positives are emerging from a crazy and turbulent time.

I hope you find some positives too or maybe some of these things resonate with you?

www.base52.co.uk

Preparing for the new normal

We’ve been in lockdown now for almost a month.

Although the Government have tried to dampen down talk of exit plans, attention is moving to how measures might be relaxed in due course and how we might return to more normal conditions, or perhaps a ‘new normal’. 

The consensus seems to be that at least in the short term, social distancing measures will still apply until a vaccine or another scientific solution minimises the risk of the virus growth accelerating again. 

The most likely sequence for an emergence from lockdown, according to Buzzfeed, seems to be allowing some non-essential shops and industries to open, followed by a relaxation in some social distancing measures and in due course, re-opening pubs and restaurants. Permitting larger public gatherings and events and opening up travel are likely to be further down the track. 

This sequence is still speculative but it does align with measures to relax lockdown seen in some other European countries and the Buzzfeed article has been picked up and reported on by mainstream media.

There is still great uncertainty over the timing and it makes planning difficult for businesses.

But plan we must.

The focus for some businesses has been surviving lockdown. Gaining access to the Government financial support, speaking to their banks, customers and suppliers. This remains the focus for many with essential funding not yet in place to ensure their survival over the next few weeks.

Before too long the focus needs to shift to emerging from lockdown. 

What will this look like in your sector? Some sectors will be permanently changed. Some will have a very gradual return to more normal conditions. There are scenarios we need to plan for and adapt our businesses to the new reality.

One of the buzzwords at the moment is ‘pivot’. In other words, changing your business offering and business model to suit the new conditions. Pubs and restaurants doing takeaway and delivery services, events companies moving on-line, football teams playing in empty stadiums.

Pivoting is a technique widely used in start up businesses. 

If their initial start up offering is not taking off the entrepreneurs will pivot their offering to make it more attractive and relevant to customers. Often these pivots are very radical and involve a complete rethink of the business, starting with the customer and how the assets and resources of the company can best be deployed to meet their needs. 

One of the most unusual and counter-intuitive pivots I read about recently was a former events company which is now manufacturing and distributing its own brand of gin.

Most of us will not be doing anything as radical as moving into the gin business but we may need to think about making some significant changes to adapt to the new environment. 

Will our sector return to a ‘pre-Covid’ situation when we come out the other side or will it be permanently changed? 

We need to be ready and prepared for the ‘new normal’ when it comes.

www.base52.co.uk

Its all changed, but good business practice still applies

This is an incredibly difficult time for everyone, both personally and professionally. 

I’ve rewritten this blog once or twice as I don’t want to understate or show any lack of empathy with the difficulties some businesses face at the moment.

For business owners, our woes don’t compare with key workers and those on the front line in the NHS, but there are huge challenges nonetheless.

For some businesses, especially those in retail, hospitality and leisure, turnover has dropped almost instantaneously to zero. For other businesses there has been a sharp decline and the future is uncertain. It’s as if all the day to day challenges we all face as business owners have been crammed into the space of a few weeks and magnified several times over.

It’s tough and we are all trying to navigate our way through.

The Government financial support measures will help many businesses through this period. As business advisors we have spent much of the last few weeks advising our clients on what support measures apply to them and how they can make a claim. For some its a lifeline, for others they have slipped through the net, at least for now and are doing what they can to get by.

Despite all the difficulties I want to argue that the basic rules of doing business should still apply. 

That is, it is incumbent on all of us to negotiate in good faith and only agree to receive products and services we can afford to pay for. If we’ve had a sudden financial shock and meeting agreed payment terms is not possible in the short term, we should speak to our suppliers and try to agree a mutually acceptable way forward.

Something which I believe is not particularly helpful or constructive is saying to suppliers, ‘Things are tough, I’m not going to be able to pay you for a while.’ Another way of putting this is, ‘I’ve prioritised things and paying you is not a priority.’

There have been well-publicised instances of some larger firms doing this and leaving their suppliers high and dry. In my own network I am aware that this has happened a number of times.

In some cases, as well as stopping payment, the customer was still expecting to continue to receive services until their situation improved.

Of course I get it that things are tough. Of course I understand that businesses want to hold onto their cash. Survival is their main objective.

But shifting their problems onto their suppliers isn’t helpful in the longer run. 

A sensible compromise is agreeing a reduction in the ongoing scope of services delivered to what is affordable and perhaps agreeing extended payment terms for old debt.

So everything is different but good business practice still applies.

As the Government has said, this will end at some point and more normal trading conditions will resume. 

Following good business practice during this period will ensure we have a better chance of emerging in good shape and with positive business relationships when the time comes.

www.base52.co.uk

Managing your business finances in challenging times

Coronavirus is dominating all the headlines at the moment.

For small business owners, particularly those in sectors which will be affected most by measures to tackle the spread of the virus, these are worrying times. Travel companies, event planning businesses, pubs, restaurants and other businesses in the retail and leisure sector are amongst those who will be impacted severely. In reality, all businesses will be affected to varying degrees and will need to take steps to protect their short term and longer term prospects.

There is a lot of information out there about how to protect ourselves and others, self-isolating and so on. There is less advice for business owners to help them get through the next few months.

The Government, to its credit, did announce some support for small businesses in the recent Budget. This included some relief on Business Rates, changes in Statutory Sick Pay and support for 'Business Interruption' loans. These measures help a little but business owners need to take practical steps to manage their business finances during these challenging times.

These are my suggested steps for small businesses to prepare for the next few months:

1) Forecast

I think it is really important to forecast profits and cashflow for the next 3 to 6 months. The future is uncertain but we need to make our 'best guess' allowing for predictions of what may happen - restrictions on mass gatherings, school closures, more employees self-isolating or working from home, less discretionary spending etc. What does the 'first draft' forecast show? For some businesses, things may not be too bad, profits may be down but they have reserves and cashflow holds up. For others, the situation may be much more severe - monthly losses and negative cashflow.

2) Consider what you can change

If your first draft forecast looks unsustainable, what can you change? Start with income. Can you do things differently to generate more sales? Then look at every item of cost. What can be eliminated or cut back to ensure cashlow remains positive until we get back to a more stable trading environment? How does the revised forecast look? If things still look bleak in the short term, you may need to look at emergency funding to get you through this period.

3) Consider funding

Where do you go to get help with funding? The first port of call for most businesses will be their bank or their accountant. A bank will probably want to see a profit and cashflow projection and your accountant can help you pull this together. The projection should determine how much funding you need and what type - loan, overdraft etc. It will also be necessary to take a longer term view to ensure that the loan repayments are affordable and the business finances will improve over time.

These are exceptional times and for some businesses, keeping calm and carrying on will not be enough.

From a financial management perspective, I recommend a pragmatic look at your future income and expenses to ensure you can get through the next few months.

If you can, that's great and this will be the case for many businesses. Tough times, but they can knuckle down and carry on.

For those with insufficient cash reserves or financing facilities who are predicting negative cashflows, they need to act now to make some radical changes and seek emergency funding if they need it.

Their future may depend on it.

www.base52.co.uk