Business owners watched the Prime Minister’s broadcast with bated breath on Sunday. Hope of clarity for when and how companies will get back to some form of normality were soon extinguished. The vague roadmap to recovery leaves the majority in limbo, reliant on diminishing cash reserves and government support. One bright spot on the long road back is the Bounce Back Loan Scheme (BBLS), which must be combined with fierce financial discipline, innovation and in many cases continued hibernation to ensure as many small businesses emerge on the other side.
The government and banks have faced criticism over a number of the business support packages currently on offer, but the BBLS has been praised for its speed and simplicity. In my view, it’s as good as debt gets. First and foremost, all SMEs must accept this is not a short term solution, because this is not a short term problem. Stretching out the loan to make it last – as the effects of this might be 12 months rather than 12 weeks – is essential.
As a business owner, cash flow is always a priority concern and never more so than now; knowing where and when you will be facing cash constraints. Make sure your books are up to date and raise invoices quickly because you need to know what is happening now so you can plan for tomorrow. If you have a fleet of vehicles, insurance, tax and maintenance will all still be outflows you have to manage.
Don’t feel bad about speaking to your suppliers about renegotiating your rates and be firm about your need for rental space. One of the first things we did at Fluidly was end the rental of office space because at this point in time, we do not need it. I would encourage all businesses in a similar situation to review their break clause in their rental agreement, either to act upon or to use as leverage for any renegotiation.
Businesses must be realistic when thinking about whether their current business model will be relevant post-pandemic. What we saw as a valued service prior to it might not be so relevant soon or in the long term.
It’s tough but it’s time to take a really critical look in the mirror and ask yourself how demand and customer behaviour will change. We have already seen the mass move to subscription, e-commerce sales, and delivery based business models. Ask yourself, can you adapt to offer deliveries of your product or provide services virtually rather than the old norms?
I’ve become a fan of the fitness videos available on YouTube and they’ve made me question the need for a gym membership, which for many people is a substantial chunk of their monthly income. If you are innovative and dynamic, you will act now to keep your business relevant if previous levels of demand fail to return.
For some businesses, such as hairdressers the current rules and guidelines simply won’t allow you to trade, but this doesn’t mean you should become irrelevant. Some barbers have turned to providing online advice via video calls on Lockdownhaircut.com to help raise money for the NHS. So there are still ways in which to remain relevant in hibernation without spending cash.
Utilise this time to build new relationships and strengthen the ones you have. Constant communication will cost you nothing and should be top of the list during this period. There are other ways to communicate with your customers, keeping them up to date with what is happening through social media and online blog posts to let them know you’re still around and remaining positive during the pandemic.