How can Small Businesses Survive COVID-19?
Every small business owner looks ahead at the start of each year and wonders what danger might be coming their way. Finances are a delicate balancing act at the best of times and it only needs one unexpected event to put throw plans into disarray. However, even the most pessimistic business owner will not have seen Covid 19 coming.
The challenges come from every angle. The exact impact will depend on your sector with some being worse hit than others. However, in most cases new business will have dropped considerably. In some cases, it will have fallen off a cliff altogether.
At the same time, small businesses are having even more difficulty than usual getting their old outstanding invoices paid. Sports Direct is among many large companies which have come under fire for initially refusing to pay their suppliers. Eventually, owner Mike Ashley said he would pay invoices but only if suppliers knocked 20% off the total. He’s not alone. Wetherspoons was another high profile company to withhold supplier payment.
The impacts for small business owners are twofold. New revenue becomes uncertain and money owed becomes much less reliable.
Meanwhile, you’ll have your own costs to meet and will want to do everything in your power to avoid making staff redundant. This is not only a case of basic decency, but it also makes good business sense. Ideally you want to be in a position to bounce back as quickly as possible when restrictions are finally eased. That means identifying every opportunity to minimise costs, maximise revenue and adjust operations to the new reality.
Adapting to the new normal
With existing revenue interrupted, one option is to see if you can adjust your business to drive some revenue during the lockdown. For example, some pubs and restaurants have turned to food delivery in order to maintain revenue. One pub in Ireland has taken to delivering freshly poured Guinness to people’s doors.
The extent to which this is feasible will depend on your business, but Coronavirus may well create revenue opportunities which, with a little adaptation, you can capitalise on.
Businesses will also be reorganising their operations to enable mobile working. Indeed, this may prove to be one of the lasting legacies of the pandemic in that many businesses are finding they can continue operations even when people are working remotely.
For that, though, they will need to ensure all staff have the connectivity required to work from home and that the company continues to meet its data privacy obligations. The ICO has promised to relax enforcement of GDPR during the lock down. Even so, obligations such as the breach disclosure remain.
Working from home creates more entry points into your system and makes it much less easy to maintain security and ensure your customers’ data is protected. Firms will have to work hard to ensure all endpoints are secured, that staff continue to follow cyber security best practice and that they understand which devices are connecting to their central systems.
Making ends meet
The biggest concern will be how businesses can make ends meet financially. As we’ve covered elsewhere in this blog, there is a range of support schemes covering small businesses, large corporations and freelancers. Furthermore, in response to problems with the existing small business support scheme, the Government has recently introduced a faster bounce back scheme which provides 100% Government backed loans, lower application requirements and fast transfer of funds.
These programmes are being adjusted and added to all the time, so it’s worth keeping tabs on how they are changing.
Even with this support, though, the financial balancing act all small businesses face has become much more difficult. Finances will be fragile and the chances of a cash flow crisis will be that more pronounced.
To survive, businesses will need the flexibility to react to challenges as they happen and to understand how their financial position is changing in real time. Sometimes it’s a case of making sure you have everything you need to survive one day at a time.
This heightens the need for expert support and for improved accounting software such as Xero and FreeAgent. They provide more visibility about income, expenses and your current cash position and allow you to compile reports instantly.
They are available on the cloud so can be set up quickly, efficiently and without the need to install hardware. Packages such as these can be vital at all times, but even more so now. They can help you assess your financial situation in real time and make it easier to provide all the financial information needed to access some of the support options available. Most of all, they can help you plan ahead and flag up problems before they can arise.
Staying safe in the Coronavirus crisis will be easier said than done. It takes a robust strategy, flexible thinking and excellent financial management to achieve your goals of maintaining business continuity for customers, generating revenue and avoiding laying off staff.