The COVID-19 pandemic has been a disaster for businesses, with many struggling to stay afloat during the lockdown. And for the 5.9 million small businesses in the UK, it is now more stressful than ever – with a lot of companies having to find new ways of working with a limited cash flow, or shutting down completely.
It is, to say the least, a very difficult time for small businesses. TheCityUK’s Recapitalisation Group suggests that the UK’s small businesses could rack up a debt bill of up to £105bn ($128bn) by March 2021. They say that this level of unsustainable debt could stifle future employment, research and development, investment and general economic recovery.
“For many small businesses, cash flow is pivotal to survival each month, meaning that the outbreak of this pandemic can have devastating effects on a company,” says Ian Wright, founder of Small Business Prices. “However, there are many ways small business owners can manage their finances to get them through this uncertain period.”
Create a three-month plan
“With aspects such as working from home and a reduced customer demand, it is worth making a three-month financial plan around how you can cut costs during this time to help the survival of your business,” Wright says.
“As a business owner, it is likely that you have regular expenses each month, which may vary to different degrees depending on your product or service. During this time it is important to now consider ways to reduce these costs, for example getting in touch with your landlord to find out if there is a way you can spread or cut the costs of office space whilst it is not being used or eradicating smaller costs such as snacks and coffee supplies usually delivered to the office.”
It is worth considering the furlough scheme that the government is providing to help you fund your employees whilst protecting your business at the same time, Wright adds.
Check your financial options
It’s important to keep up to date with all government announcements, initiatives and schemes that are being launched to help companies with financial aid during this period. You can find out what support you may be eligible for on the Gov.uk website.
“With news on the pandemic evolving each day, government announcements are being released regularly, meaning it is crucial as a small business owner to be keeping on top of all the options that are becoming available to you,” Wright says.
As a small business owner, it’s essential to be able to adapt to any changes in the working environment so you can keep going when things are tough. This might mean letting people work from home and making sure you have the technology to do so, or altering the products you offer. Gyms may be shut, for example, but some may be able to offer online classes or lessons for customers.
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“The next few months may see you need to implement new technologies to support a new way of business. This will be a well worth investment if it boosts your business and creates new value during this time,” Wright says.
“Additionally, if possible, make sure your product or service is online for everybody to access, as well as promoting your company on social media platforms such as Twitter and Facebook. The internet allows you to keep in touch with your customers and get feedback from them to accommodate your business accordingly.”
Chat to others
It’s easy to feel like you are struggling alone as a small business owner when things are difficult. Loneliness can be a particular problem when social distancing is the new norm too. When times are hard, though, it’s important to stay in touch with other people who may be in the same boat – either for advice or reassurance.
“Communication has never been more important,” Wright says. “This communication is needed across many sections of your business, from keeping your employees updated on any new changes you are making as a company to seeking advice from financial advisors on how to get your business through the rest of the year.
“In addition, businesses can see pick up in their profit simply through word of mouth, meaning that the more people you know, the better,” he adds. “It is critical to keep getting your business heard about, being proactive in your communication will see you with more opportunities and more supporters, which will be able to help during this time.”