By Rehan Ahmed
Much of the world as we know has come to a standstill due to the coronavirus pandemic. Businesses have been forced to close for more than a month now, however there are talks of lockdown relaxing and for businesses to open up – but what would a post lockdown economy look like? What are the tips for survival?
We asked Rehan Ahmed a restructuring and insolvency Partner at Quantuma, a specialist independent business advisory firm, to offer his expert advice on the changing face of businesses in a post-lockdown world. Here’s what he had to say:
As we enter week seven of lockdown, this is definitely a moment in history that will change the way we live our lives going forward. As an advisory firm, we have been working with a number of businesses on their options during this period: advisory and restructuring work through to formal insolvency appointments.
Pivoting a business
In the public domain, we have already seen many businesses close their shops due to the enforced lockdown and, unfortunately, the reality is they may never reopen. That said many businesses have done phenomenally well during this pandemic. Some have been able pivot their business to open new routes to their customers, whilst others have seen demand increase due to changes in customer spending habits.
What we are seeing
Apart from ‘you must be really busy right now’, the most common question we have been asked here at Quantuma is ‘what can businesses do to survive and thrive during this period?’
I believe we are now entering what I call phase two of the pandemic. Phase one was the initial shock of the lockdown where we were advising businesses not to panic and explore all their options including government support that has been introduced. Phase two is about planning ahead for the duration of this pandemic and life after the lockdown. Here are some pointers as to what businesses should be doing during this period.
Tips on navigating this pandemic and beyond
- Cash management:
As the classic saying goes cash is King. Given we are now into week seven of the lockdown businesses need to manage cash more effectively and ensure they are not wasting valuable cash reserves.
- Review and have sight of costs in all departments. Break down all costs and categorise them to the relevant departments – Sales, Finance, Supplier, HR, Operations etc.
- Depending on the size of the business, allocate one department to someone to ensure the costs are being managed and make sure everyone is clear on what they are doing.
- Review each expense and the following questions will dictate what needs to be done with that expense – is it needed? Is it critical? Can the business survive without this? Can the service be reduced and still survive? Can we get a holiday on this expense during the pandemic?
- Keep in constant contact with the team and review your payment plans on a regular basis as some payments may change from critical payments to none critical payments so priority of payments may change.
- Diversify your offering
Entrepreneurs are always creative and innovative – this time is no different. Businesses should be looking at what can they be doing differently in the current climate to generate income within their business.
Pivoting the business could be a lifesaver in this climate especially during the lockdown period. I have heard of some fantastic success stories where a business has changed and remodelled themselves. An example would be that of a high-end restaurant whose takings have doubled to what they normally would have in the shop just through doing it through a delivery service with less staff. Think of ways your business can diversify and if possible do not just look at this as a short-term lockdown solution.
- Taking the time to improve processes
This period is a great time to assess your business in depth. There are some essential questions businesses should be asking themselves right now when reviewing the business:
- Can processes be improved?
- Are people within the business in the right role?
- Is the whole business focused on the current strategy and is it working?
- Can we use technology to improve efficiencies?
These questions would be a starting point for businesses to assess where they are, and each business will develop further questions as a result of this exercise. One of the interesting questions worth asking yourself right now is what would you do if you were to set up your business today? If your answer is different to what you are doing right now, then change it.
- Do not panic and seek professional advice
Do not panic and make rash decisions during this period. Going down an insolvency route might well be the best option for a business at some point but make sure you explore all your options before making a decision.
This brings me nicely on to my final point of seeking professional advice. That classic phrase of ‘my mate said…’ has been replaced by ‘I saw a post that said…’ It would be advisable not to be sucked into listening to social media and basing your important business decisions on what you heard on various forums. Speak to specialist advisors in that area.
Whether you need to speak to an employment solicitor on advice on staffing issues or your accountant on how to deal with HMRC debts or an insolvency practitioner of options to restructure your business, these professionals will give you the right advice tailored to your business. The worst thing you could do is not take the right advice which could end up haunting you later on.