Since the first Covid lockdown was announced in March 2020, many owners have struggled to sustain their businesses. Now, as businesses again open their doors and begin to welcome back customers, there’s an air of celebration and, for many business owners, a sense of relief. For others, however, the doors will stay firmly shut.
In February, the results of an Enterprise Research Centre survey of over a thousand SMEs were published. They showed that while 28% reported Covid-19 has had a direct negative impact on their business, another 21% said there had been a positive impact.
For example, with restaurants and other eateries closed, supermarket home deliveries surged. And, after an initial slump attributed to fears about food deliveries potentially spreading the virus, takeaway deliveries also benefited. We almost don’t need to mention how well Amazon’s profits have soared over this period.
Among the best placed to survive, and even thrive, were those businesses that had the vision and will to reinvent themselves. They saw a new demand for a product or service and adapted to meet it, or realised that while they couldn’t trade in their usual way, they could still operate from their core business. Think sit-in restaurants that pivoted to home deliveries, and bricks-and-mortar retail outlets that moved to online ordering.
The government offered help to less-fortunate small businesses in the form of loans and grants. Low-cost loans, staff furlough schemes, business rate relief and reduced VAT have helped many businesses to keep going.
However, many businesses, including many of those that have a lot of staff and/or no premises, haven’t been able to benefit from those same tax cuts and relief, and in some cases are struggling to survive.
The Federation of Small Businesses estimates that 20% of companies have not been supported by government Covid schemes because they don’t qualify, often because they don’t fit into prescribed definitions. That has meant, for example, many businesses in the hospitality sector have been supported, whereas the businesses that supply them have not.
More change is on the way
During lockdown, demand for certain goods and services rose, and with the easing of restrictions that demand is likely to drop. At the other end of the see-saw are those businesses that saw demand fall during lockdown, and can now anticipate a surge.
The need for adaptability and invention is nothing new in business, but the seismic changes to the business landscape since early 2020 have been more extreme than most owners will have previously faced. The question is: how many still have the energy for another big shift? And what about those who can’t see any kind of positive future?
Many business owners have taken on significant amounts of debt to keep their businesses afloat, and that has to take its toll, especially if the debt carries personal liability. Some may not have the strength for another fight, or the future may look so bleak and the odds so poor that it simply doesn’t seem worth it. Many are struggling to know what to do for the best.
If a person feels ill, it can be frightening – but it isn’t until they get a professional diagnosis that they know what they are dealing with, and what kind of treatment they need in order to recover. It’s the same with finances. You need to know your numbers: how much you owe and what it costs to repay. You also need to understand your commitments – most significantly, to what extent your personal assets are on the line.
Once you know where you are, you can start to plan to get to where you want to be. You can make educated decisions as to whether there is a future for your business.
If that’s something you need help with, give us a call. There are many numbers in your business that have an impact on performance and we can help you get clarity on where you stand and what your options are. From your different sources of revenue, to profitability, to cash flow and more, we’ve got tools, resources and know-how to help you.
The road ahead
If, having gone through your numbers, you decide that it really is time to close the doors for good, call us. It is possible to cancel debt if the picture is bleak, but it’s rarely a straightforward choice. There are serious implications attached to filing for insolvency, including personal liability and the fact you may never legally be able to own and run a company again.
Before you go down that road, take a minute to consider whether there is any viable route for your business, going forward. Ideally, we’ll help you on the road to recovery. If that’s not possible, we’ll help you close down those debts with minimal penalties to you and your wallet.
We’ve partnered with insolvency specialists who we trust. They’re not here to simply shut down your business – they’re here to give you correct and clear advice so you know what your options are. It puts you in the driving seat and gives you back some control.
It can feel lonely being a business owner, and when times are tough the responsibility can be overwhelming. However, you should know we’re here to support you on this journey. You don’t have to struggle alone – and with a robust business plan, carefully structured financial recovery is possible for many.
Zoo Accounting