Few of us were prepared for what 2020 would bring.
The COVID-19 pandemic wreaked havoc on the global economy, leaving many businesses fighting for survival – and with the UK in the midst of another lockdown, it appears that things are set to get worse before they get better. But, after weathering the storm, it’s time to rebuild.
So, if you want your business to survive and thrive in the future, it’s important to plan, regroup and rebuild so you can come back stronger than ever.
With so much advice out there, it can be difficult knowing where to begin. That’s why we’ve put together this seven-step company rescue guide on how to rebuild your business following the coronavirus pandemic.
7 steps to rebuilding your business following COVID-19:
Step 1 – Review the damage
The first step towards rebuilding your business is taking a look at just how much you have been affected by the pandemic.
If you haven’t done so yet, it’s a good idea to compare your cash flow statements and profit and loss totals to last year’s numbers, so you can get a good idea about exactly where you stand financially.
But your business might have been affected in other ways, too. Perhaps you’ve had to furlough staff, or maybe you’ve had to cut right back on your marketing budget? By identifying the true impact of COVID-19 and carefully reviewing the damage, you’ll be in the right place to start moving forward.
Step 2 – Ready, steady, PLAN!
Once you’ve reviewed the damage, if you think your business still has a viable future, it’s time to start putting a business recovery plan in place, which a licensed insolvency practitioner will be able to help you with.
You’ll need to look at your business strengths, weaknesses and areas for potential change so that you can put together a thorough plan and start cutting any unnecessary costs.
What are the most important areas of your business? What is your basic operating budget? The minimum finance you need?
Putting together a carefully created business recovery plan is essentially a chance to change strategies and start again – and there’s no better time to go back to the drawing board!
Step 3 – Get your finances in order
So, you’ve assessed the damage and started putting a company rescue plan in place. Now it’s time to get a clear picture of your financial situation so you can decide on your next steps. Start by auditing your stock to see if you could free any up to bring in more funds.
Look at your budgets and forecasts and see what is achievable in a post-pandemic world, and also make sure you review your balance sheets to see what efficiencies you can make in the future to save money and improve your cash flow.
Positive cash flow is absolutely key to rebuilding your business, especially in a time that is fraught with economic uncertainty.
Now is the time to be frugal and cut as many costs as possible: you should be questioning each and every expense, from the cost of your recent to liaising with suppliers to negotiate better deals. When it comes to controlling your cash flow, every little helps!
Step 4 – Take advantage of government help
The government has unveiled a number of new support schemes for businesses to help to take the pressure off.
For starters, furlough has been extended until the end of April 2021 under the Coronavirus Job Retention Scheme and Bounce Back Loans are open until 31st March 2021 and can now be paid back over 10 years.
Additionally, if a business is facing severe financial difficulty, they can defer all payments for up to six months.
A number of grants have also been announced to help businesses survive the third lockdown, depending on the business’s rateable value, whilst businesses in the retail, hospitality and leisure sectors are set to receive up to £9,000 in one-off grants.
There’s also a Coronavirus Future Fund which is set to issue convertible loans between £125,000 and £5 million to innovative companies who are facing financing difficulties due to the pandemic.
Step 5 – Think about additional finance
Of course, even with extra help from the government, it’s possible that jump-starting your business after the pandemic may require extra finance that you simply don’t have. In this situation, though, there are still some options to consider.
Invoice factoring and invoice discounting, for example, provide regular cash injections each month with funds being released just 24 hours after issuing your invoices.
With invoice financing, lending is organised against the amounts raised on your invoices.
Invoice discounting is a type of debtor financing, where a finance company will advance a portion of your unpaid invoices, so you have immediate liquidity, whilst invoice factoring converts outstanding invoices due within 90 days into immediate cash.
Both options are powerful business tools that enable you to raise money from your debtor ledger. Other alternatives include asset-based funding, peer-to-peer funding and crowdfunding; for further ideas, don’t miss this blog.
Step 6 – Adapt to the ‘new normal’
The coronavirus pandemic has meant that many companies have had to completely pivot in order to adjust to the new normal. Post-pandemic, the world is a very different place, and things that worked just fine before might not be right for you anymore.
For example, shops have had to increase their online presence in order to make sales, and cafes and restaurants have had to switch to a take-away service.
Customers are also more nervous now, and need reassuring of the steps that companies have taken to ensure their safety.
When planning for the future, you need to think about how life has changed for your customers in the past year and how you can adapt and change to make sure you are still relevant.
Once you start looking at things from your customers’ perspective, you will be able to begin to see the changes you need to make.
Step 7 – Consider a CVA
If you are still facing financial difficulty despite taking all the steps above yet you believe your business still has a viable future, it might be worth considering a Company Voluntary Arrangement.
A CVA is a powerful business turnaround tool that gives time and space to companies so that they can recover and essentially trade out of debt.
It’s a contractual agreement whereby a business pays back what it can afford to its creditors in a sustainable manner over a set period of time – and after that time period is up, the rest of the debt is written off.
There are a number of benefits to a CVA, but to name a few, you can improve cash flow, shareholders can retain control, it costs less than administration and your creditors have a greater chance of being paid what they are owed.
Ready to rebuild?
If your business is struggling as a result of the COVID-19 pandemic, don’t suffer in silence. At McAlister & Co, we are company rescue experts and can provide you with a number of bespoke turnaround solutions to help you rebuild your business.
The sooner you take action, the sooner you can start to put a plan in place and start to move forward. So, if you need clear, strategic advice from a friendly, knowledgeable team, contact us today.
