It has been great to see many businesses adapt and thrive throughout the pandemic, while for those facing ongoing uncertainty and challenges, the roll-out of the Covid vaccines now provides some welcome light at the end of the tunnel.
It has been great to see many businesses adapt and thrive throughout the pandemic, while for those facing ongoing uncertainty and challenges, the roll-out of the Covid vaccines now provides some welcome light at the end of the tunnel.
However, the future still remains uncertain for many. These businesses still have time to take action and it is vital that this window of opportunity is used wisely. Relying on a return to business as usual is a high-risk strategy, and now is the time to future proof your business.
Here are some of our top tips about what business owners should be doing:
Have a sharp focus on where you make and lose money. It sounds simple, but many businesses do not have a clear picture of this. Analyse your data from different angles and challenge your assumptions and beliefs about the business through a different lens. When this is clear, the root problems can be identified and solutions developed.
Either fix or exit the loss-making elements. Exiting contracts, customers, divisions or subsidiaries can reduce your risk and allow you to focus on maximising your core business. Allow sufficient time to implement this as there can be bumps along the road. Make sure your stakeholders are on board and think about all of the implications to ensure that this does not damage the core business.
Collaborate. Increased collaboration has been a key positive theme that we saw in 2020. This has been not only been within organisations, but externally in different ways between business owners, industries, suppliers, customers, lenders and professional advisors. Don’t underestimate the power of collaboration and relationships.
Have a deep understanding of your customers. Consider how you can widen your customer base as the loss of a key customer is a common cause of business failure. If you are currently unable to provide your product/service without making a profit, can you raise prices, can you improve your offering, can you enter new markets or can you provide it more efficiently?
Developer a deep understanding of your supply chain. We also see the loss of a key supplier as a common cause of the failure of good businesses, which could often have been avoided. Understand whether your suppliers could be at risk and have a plan to replace them or mitigate the potential risks.
Optimise your working capital. Improving debtor collections, stretching creditors and changing your terms is the first place to look. This is not always as simple as it sounds and can have an impact on relationships. It’s amazing what analysing your data in a different way can do to unlock tied-up cash without impacting supplier and customer relationships.
Put the company first. No-one likes taking difficult decisions such as making redundancies. However, we have already seen some businesses burn through Covid-19 funding packages and go into liquidation because they did not want to lose good staff that they felt would be difficult to replace when demand returns. But now they have no business and all the jobs have been lost. By putting the company first and fully assessing the downside scenarios and all the options, these decisions can become clearer.
Open-up your options. Even if you think there may be a risk that you cannot repay debts or will run out of cash, there may be other options. The government has introduced new rescue tools to help businesses (the Moratorium and Restructuring Plan to help buy the business more time and compromise its debts) and we have access to specialist funders that may be able to help.
Scenario plan and create contingency plans. Having a clear timeline of the potential scenarios, potential actions that can be taken and when they need to be taken, including fall-back contingency plans, can give business owners peace of mind and renewed control when there is uncertainty.
Don’t forget the wellbeing of you and your employees. Last year was a tough year for all. Everyone understands this and now is the time to support each other, be open and get help without any fear of stigma.
Of course, there are many other actions that businesses can take, and Smith & Williamson can help to get you match fit and battle ready for 2021.
Initial conversations to consider how we may help are free of charge. Our focus is always to provide a clear return on investment. As such, our approach to fees is flexible and transparent, and we can discuss a suitable fixed fee to provide you with the certainty that you need.
For further information please contact Claire Burden on 0117 376 2283 or claire.burden@smithandwilliamson.com, or Tim Sloggett on 0117 376 2269 or tim.sloggett@smithandwilliamson.com.
Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. Clients should always seek appropriate tax advice before making decisions. HMRC Tax Year 2022/23.
DISCLAIMER
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of publication.
The tax treatment depends on the individual circumstances of each client and may be subject to change in future.
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This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.
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