It’s a difficult time for all of us at the moment, but businesses especially are struggling due to coronavirus. In saying that, we would encourage you all, where possible, to consider independent business during this time and supporting them. Whether it’s your local farm shop or local restaurants that are opting into takeaways, etc. Whatever it may be, your help and support will go such a long way.
Running my own business at the moment has required a lot of careful and strategic decision making and management – some easier than others.
As part of our blog content at the moment, providing any help and guidance we can during coronavirus lockdown, we decided it was crucial for us to share guidance for businesses. So below you will find some tips and ideas for you and your business to consider.
I hope this helps!
Tips For Businesses To Cope with Coronavirus
1.0 80% of Surviving the Pandemic Relates to Cash
If you have enough cash reserves to see you through 6 to 12 months, that is clearly a good thing. However, if you don’t (and even if you do), you need to look at ways of building up cash reserves quickly. Check out this useful mind map detailing the range of support available depending on criteria such as business structure and sector.
1.1 Government Grants & Loans
One of the biggest concerns for business owners right now is having enough cash to ride out the storm. Business grants or loans are a great option for any new or existing businesses. With no need to pay back a grant or loan they are an attractive source of funding and the best financial solution for any business.
A full range of governmental support measures have been made available to UK businesses during coronavirus (COVID-19). So it’s important that businesses take advantage of all grants and loans available.
Also take a look at the top 226 small business grants & funding programmes in the UK right now.
1.1.1 Q2 VAT Delay
Due to coronavirus (COVID-19), you can delay (defer) any VAT payments due between 20 March 2020 and 30 June 2020. This is one of the best actions the UK Government has taken for businesses as it provides a significant cash injection. So let’s hope they do the same for Q3.
However, It is important to accrue for the repayment in 12 months time in monthly payments to a separate account.
1.1.2 R&D Tax Credits
R&D tax credits are a great way of generating cash and HMRC says its priority is to keep to its published aim of clearing 95% of SME tax credit claims within 28 days. Therefore, it’s also a relatively quick process. There are plenty of ‘experts’ around to help. Seek advice from two or three companies and trade off their fees.
Make sure you’re abreast of any help available from your bank such as mortgage holidays, loans and credit cards. There’s lots of useful content out there so just ensure you’re fully informed.
Renegotiate your facility with your bank when you don’t need it rather than when you do. For the best rates the time to act is now.
1.2.2 Be aware
Not all offers of help are as good as they first seem. The first government Covid-19 loan for example, is very useful as it is interest free for a while, but it doesn’t get you off the hook regarding personal guarantees the way it was portrayed.The 100% guarantee version is much more satisfactory. Be diligent when looking into your options and make smart choices that are right for your business.
1.3 Clients and Suppliers
1.3.1 Cash Flow
If you can, pay people later and get cash in earlier. Collect any debts owed and consider changing your credit policy as this will have a positive impact on cash flow. Have conversations with your clients and suppliers and negotiate terms in your favour.
1.4 Stock & Inventory
Improve your stock turnaround time and evaluate inventory. When looking at your inventory, you want to observe the volatility of sales. Do you have too much cash tied up in products that sell only sporadically? Would that money be better off used in your “bread and butter” items that turnover more quickly?
You might end up having tons of money tied up in inventory without actually meeting your customers’ needs.
2.0 Sell More; Improve Margin and Reduce Costs
There are 3 things any business can do to make more profit: sell more; improve margin and reduce costs. In the current climate you should look to do all three, in fact, in any climate you should look to do all three.
2.1 Sell More
Don’t make any knee-jerk decisions when it comes to your marketing operations during the pandemic. By doing so you can actually create a longer road to recovery. Carefully consider your options and discuss them with your wider team. There are strong arguments to invest in marketing in a recession.
“When times are good you should advertise. When times are bad you must advertise.”
The adage historically has always been right. In the 1920s, Kellogg’s doubled its advertising while Post (Grape cereal) cut back significantly. Kellogg’s profits grew by 30% and they consequently became the industry leader.
In 1973-75, Toyota pressed on with the promotion of their Toyota Corolla and passed on Volkswagen as the top imported carmaker in 1976.
In 1990-91, Pizza Hut & Taco Bell increased their marketing budgets while most competitors cut theirs.
Pizza Hut grew by 61% and Taco Bell grew by 40%, while most competitors dropped 25% in sales.
In 2009, Amazon sales grew 28% following the introduction of the Kindle when they invested in the downturn.
Microsoft and Airbnb were founded in recessions.
In times of economic hardship there is far less competition marketing, which means you will see results not only quicker but probably at a lower cost too. You could be looking at lower pay-per-click advertising, reduced rates and a better ROI.
It is essential that you maintain at least some level of marketing investment throughout the Coronavirus pandemic.
Some of your competition is going to disappear in the coming months be it as a result of bankruptcy or being bought out. This is a business opportunity. The less competition out there, the better your odds of success.
As the world recovers, you’ll experience a growth in revenue and a boost in ROI from your marketing spend.
2.2 Improve your margin
Increase your prices. You want to strike a balance between keeping your prices competitive and fairly compensating the time and effort put in.
At the end of the day, you are a business and your aim is to make a profit. Check out your competitors, in some cases, lower prices can actually make your company seem less qualified. Then, negotiate with suppliers and look at ways of improving efficiency.
It might also be a time to evaluate your clients. Cut low-margin clients, products, or services, and invest the saved time and money in higher producing parts of your business.
2.3 Reduce your costs
Go through everything line by line and look at ways of reducing costs. Streamline your operations and reduce operating expenses. Anywhere there is room for improvement, make the changes. Look to negotiate everything.
2.4 Look at the structure of your business
One of the best tools I know to evaluate and review your business is here. The Value Builder Report. Value Builder | Find out the value of your business in a few clicks. It costs nothing and both provides and enables you to ‘self evaluate’ and ultimately position your business for sale.
It gives a strategic review of your business and areas for you to consider to improve efficiency and structure which ultimately will impact profit and growth. Profit ultimately converts to cash
More significantly it highlights the areas you most need to look at in order to drive that profit.
There are some clear signs that this health crisis will end. Countries are succeeding in containing the virus using social-distancing practices, testing, and contact tracing. So although the general consensus is, yes, we are heading into a global recession, there is light at the end of the tunnel for our economic outlook with the Bank of England expecting “only limited scarring to the economy” over a 3 year period
If you have any specific questions or topics you would like to hear about, then please do let us know.
We want to help as much as possible.
Live Long & Prosper 🙂
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Have an epic day!