As we enter the third week of lockdown in England and reflect on improved testing, new vaccine trial results and a host of experts talking on the news about the timing of rollout and when Covid-19 will no longer be a threat to normality, it is worth remembering our lives are and will remain different for the remainder of 2020 and most of 2021. With that in mind we need to be resilient as individuals, families and businesses.
The latest indicators for the UK economy found nearly half (49%) of currently trading UK businesses reported a decrease in their turnover below what is normally expected for this time of year. On 8 November, overall UK footfall dropped to 33% of the level seen on the equivalent day last year as national restrictions were introduced in England.
Clearly we are living in tough times and it makes sense to take advantage of Government supports both directly such as the extended job retention and self-employed support schemes, deferring tax and using bounce back loans. There are also grants available to help firms with Brexit changes for import and export administration.
We have helped many businesses apply and claim for these supports and if you need any assistance, please contact us.
Business planning for 2021 will be difficult as we don’t know the timings for mass vaccinations and whether they will truly work but there are some practical steps you can take to minimise potential disruption to your business:
1. Review your Budgets and set realistic and achievable targets for the remainder of 2020 and for 2021.
2. Get your employees involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
3. Use ‘bottom up’ budgeting where everyone in the business gives input on areas over which they have control – target a 10% cost saving.
4. Review and flowchart the main processes in your business (e.g. Sales processing, order fulfilment, shipping etc.) and challenge the need for each step.
5. Encourage team members to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about efficiencies and cost reduction).
6. Put extra effort into making sure your relationships with your customers are solid.
7. Review your list of products and services and eliminate those that are unprofitable or not core products/services.
8. Review efficiency of business processes and consider alternatives such as outsourcing certain activities locally or overseas.
9. Agree extended payment terms with all suppliers in advance.
10. Pull everyone together and explain the business strategy and get their buy-in.
Please talk to us about cashflow planning for the next six months, we can help with a template so you can do this yourself or work together to produce estimates for a variety of scenarios.
All the best,
Steve
Steven Hillman ACA
Chartered Accountant
Tel: 01934 444100
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