Many businesses are under threat following the coronavirus outbreak. How can businesses stay open and thrive financially despite a reduction in economic activity?
ACCA UK and the Corporate Finance Network’s latest poll suggests that 39% of businesses will not be able to access the additional cash they’ll need to last two more weeks of lockdown. After four more weeks, this number is likely to increase to 53%.
Maintaining cash flow
Almost every business still running is either working remotely or is open but with tight restrictions. This means they are still generating some revenue, but not as much as they normally would. Nando’s, for example, has decided to open to deliver exclusively to NHS staff and key workers.
Having a strong online presence is a great way to showcase your products or services to reach a new customer base. It makes it easier for people to find you and access what you are selling - it could even create a global demand for your business. Engaging with potential or existing customers on social media is a free marketing tool for your business, while making the most of other free platforms to host webinars and online meetings can keep your business growing. You can continue to engage investors, customers and clients with these free tools.
Encourage companies without an ecommerce platform to create one and examine delivery or click-and-collect options – website platforms such as WordPress and Wix are free to use and can keep revenue coming in. If you don’t mind investing, a card machine and PPE for delivery drivers would be an efficient way to keep them safe. This will provide a good return on investment as it will help to deliver income where none would have existed.
Government financial support
The Chancellor of the Exchequer, Rishi Sunak, has implemented a £330 billion financial scheme to support businesses during the coronavirus crisis.
CJRS – The Coronavirus Job Retention Scheme (CJRS) means that anyone who would not be able to work will still retain their job and receive 80% of their usual income through the government. In the long run, you, as the employer, will only end up paying 20% once you claim 80% back from the government. Thousands of businesses applied for this opportunity within 30 minutes of this becoming available.
Grants – the government will provide grants of up to £10,000 to retail, hospitality and leisure businesses with a rateable value under £15,000, or £25,000 to those with a rateable value between £15,001 and £51,000.
CBILS – The temporary Coronavirus Business Interruption Loan Scheme (CBILS) gives businesses access to bank lending, overdrafts and other financial solutions to help them through the COVID-19 crisis. No interest will be payable for six months and the guarantee is 80%. Loans through CBILS will be increased from a maximum of £1.2 million to £5 million.
SSP – SMEs can claim back any coronavirus statutory sick pay (SSP) they’ve paid out to their eligible employees.
Self-employment benefits – The Universal Credit minimum income floor has been suspended until the outbreak ends. It’s now accessible at a rate equivalent to SSP, which self-employed people may not be eligible for. Contributory Employment and Support Allowance will be payable at a rate of £73.10 a week for business owners over 25, for eligible people affected by COVID-19, or self-isolating, from day one of sickness, rather than day eight.
Those who apply for these loans, grants and benefits will hopefully come out of the coronavirus crisis with enough money to keep going. The economy is likely to suffer for a while, but less so if we #KeepBritainWorking.
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