Coronavirus – Is your business struggling?
There is no doubt that the past few days have been unbelievably challenging for many businesses across the country. Certain sectors have been particularly hard hit, with pubs, restaurants and entertainment venues ordered to close. Many other businesses have also seen a sudden and dramatic decrease in trade as a result of the Government’s advice to practice ‘social distancing’ by avoiding crowded areas and avoiding unnecessary contact with others. Many retail businesses have effectively closed their doors and many other sectors are feeling the knock-on effects of the coronavirus crisis, which is likely to be still at the early stages.
We are currently being approached by a large number of business owners who are facing significant challenges to their organisations, or who are forecasting significant problems ahead. Whether you run a hospitality or travel business and have seen business dry up over the past week, or if you run a retail business that is struggling with the rapid decrease in footfall, or you manage a manufacturing business that is seeing reduced orders, the next few weeks and months are likely to be exceptionally challenging.
The Government has announced a raft of emergency measures to help businesses that have been impacted by the COVID-19 virus. These announcements have come thick and fast, with support promised to businesses to pay sick pay to staff who are self-isolating, deferring tax payments, loan schemes and help with paying wages to staff who have been retained but ‘furloughed’. On the face of it, it looks like the Government has got the message that businesses need significant help, urgently.
As one may imagine, these are complex schemes which would normally go through months of policymaking and consultation prior to being launched. Instead, these initiatives are being launched with very little detail being made available – because the Government hasn’t yet thought through how it will work in practice. For example, will the loan scheme need a Personal Guarantee from the directors? Given the current uncertainty over how long this crisis will last, can any banker or professional advisor reasonably advise a business owner to place their personal finances – and by extension their family’s financial security – at risk in such turbulent times? Also, how long will it take for Government cash to actually get through to the companies that need it to pay wages today, or this week, or by the end of the month?
The final straw for some businesses
In these unsettling times, there will be some businesses that have been struggling for some time before the coronavirus crisis emerged. For these businesses, any deterioration in their financial position may be the final straw. These businesses need to be taking urgent action to address their financial problems, by taking professional advice from an insolvency expert, who can guide them through all their options so that the directors and senior management can make an informed decision about which direction to take.
For other organisations, this newly emerged challenge may have caused unforeseen and immediate problems for their cash flow and, in the short term at least, placed the business at risk. These businesses need to make sure that they review all the potential sources of assistance and decide which they are able, and willing, to take advantage of. The directors of limited companies also need to ensure that they are aware of their duties at a time of financial stress for their business and that they have explored whether they need to use a formal business turnaround and rescue procedure.
We are here to listen
Running a business can be a lonely position, particularly in owner-managed small and medium sized businesses, and the lack of a ‘sounding board’ can make difficult times such as this are all the more challenging. If you are concerned about the finances of your business in these troubled times, you can call us to discuss your concerns and to find out more about the services that we offer to help turn around struggling businesses.
Call us today on 0114 285 9500. We can help.