Business Recovery Post Covid-19
The COVID-19 pandemic has shaken the very foundations of the global trading infrastructure. At least 21,000 more companies than last March failed this year, and many are on the verge of bankruptcy. It is now the biggest question in the trade market on how to start business recovery amidst the pandemic. Business is not just selling your products but also making sure the business maintains its going concern regardless of the circumstances that may result from economic uncertainty.
The intensity of the impact of the pandemic may vary from industry to industry, depending on the business type and the factors that may impact it. For instance, traditional brick-and-mortar businesses might find it harder to sustain themselves than if compared to software as a service business. Regardless of the business model, it is important to have an effective business recovery plan in place to challenge such unpredictable situations. A strategy that will help them resume their operations successfully once the situation gets under control.
Business experts suggest that businesses with an exit strategy in place are more likely to be able to cope better after a crisis.ย There are also other options for businesses that are struggling to come back from the economic impact that COVID-19 has had on them, such asย Business Support Channels, Loan Schemes, Government Back to Business Support Schemes, etc.
This guide is about the important steps to take at this time.ย
Impacts of COVID on business?
The Covid-19 outbreak was first diagnosed in Wuhan at the end of 2019. The spread of the disease was so rapid that it was able to extend its tentacles to over 200 countries around the world. The COVID pandemic has negatively impacted global economic growth, unlike ever before in the last 100 years. Research by the Congressional research service reveals that the ongoing pandemic could cut global economic growth by 3-6% in 2020. There might be signs of a partial recovery in the year 2021 only if there are no further waves of infection.
The economic consequences resulting from the lockdown around the world have raised the possibility of another global economic recession with catastrophic consequences. It has already led to the highest levels of unemployment since the Great Depression back in the 1930s. The cost of human lives, coupled with the rising levels of poverty, increasing unemployment, and rising social unrest, can leave permanent effects on global economic growth.
Some expected that Global trade could fall by 13% to 32% based on the intensity and extent of the global economic downturn.ย Trade-dependent economies areย more likely to suffer from this pandemic as compared to agricultural economies, according to the latest reading of World Merchandise Trade.ย There was a historic fall in the world merchandise trade in the second quarter of 2020. The additional reading indicated partial recovery and output in the third quarter, but the strength of such upticks remains highly uncertain.
Design a Recovery Plan to Recover your Business
To kick start a strategic plan, Rob Brown, founder of the Business Development Academy and author of the Amazon bestseller Build Your Reputation, recommends the first steps should be:
- Get your house in order
- Make sure your customers are ok
- Examine how you replace lost revenues and revive the pipeline to have a better business turnaround
Evaluate the financial losses
There are several considerations to keep in mind when working on a recovery plan for a business. It is advisable to begin the development of the plan by assessing the volume of the impact of COVID-19 on your business. You can begin by inspecting the most important accounts, like sales, profits, and cash flow, by comparing their current balance with the pre-crisis balance, like the past year or quarter. This helps you identify the most vulnerable functions of your business and lets you plan accordingly.
Some studies suggest that there is a very small fraction of businesses that benefited from the Covid-19 pandemic. For instance, the pharmaceutical industry did not see any negative impact of the pandemic, so it depends on the nature of the industry.
It would be best if you also looked beyond the profit and loss to assess the impact like logistics, HR, business competition, and others. For instance, if you intend to cut your business team short, then you must include this in your business rebuilding plan. Similarly, if you plan to cut your expenses on your marketing or logistics budget, then you must consider these factors. You can do all this while working on a rebuilding plan. These aspects let you look at your financial capability to recover the business.
If you are not sure how to evaluate the financial impact of various factors on the recovery of your business you should look to speak to an expert business accountant who should be able to help you accurately evaluate the financial damage caused by the Covid-19 pandemic. They will also help you identify the weak and robust performing aspects of your business to help you devise an effective business recovery plan
Revisit your business plan for Effective Business Recovery
Your business might be based on an ideal business model and might have been performing exceptionally well before the crisis. However, the perfect business model does guarantee success when faced with a crisis. So you should revisit your existing plan to modify it accordingly.
There is a lot to consider when modifying your existing business plan. You must prioritize finding an answer to how you can adjust your business to the new normal. For instance, if your business relied on customers from the vicinity of your brick-and-mortar store, then you might want to adopt a digital approach to expand your reach and expect more customers to purchase your products from home.
It is advisable to conduct a thorough analysis of how your industry has been affected by the Covid-19 pandemic or self-isolation. You might end up exploring new opportunities and trends to follow when you look at your industry and how your competitors are responding to the crisis.
Finding a gap that your business can fill might expand your customer base and grow your level of profits. Companies revisiting their business model must know about their strengths and weaknesses. You have to identify whether your business practices pre-crisis are still working or not. If the answer is negative, then you will have to adjust your business setting according to what the situation demands. Do not forget to review your long-term goals and objectives. Be careful about setting realistic goals and expectations regarding business recovery while considering the circumstances.
Seek funding and support from the government or lenders
If your business is facing financial difficulty due to the crisis, then you might want to seek funding as working capital to recover your business.ย You can either seek support programs being offered by the UK government or for business loans. For instance, small businesses can utilize short-term business loans via the Coronavirus Business Interruption Loan Scheme. This loan scheme aims to provide financial assistance to businesses affected by the ongoing crisis
If you plan to seek support from the government, then you should know how you can apply to various support schemes being offered. For instance, the Small Business Grant Fund (SBGF) is an initiative to help sponsor small and rural businesses across England to help them cover their upfront costs during the Coronavirus pandemic.
There is a wide range of funding sources that small businesses can consider, like:
- Business credit cards
- Business with small term term loans from credit unions or online lenders
- Vendor tradelines
- Asset-based funding
- Business lines of credit
- Inventory financing
- Capital financing
- Purchase order financing
Seek Help for Funding Options
Keep in mind that every funding option you have on the list will always have its advantages and disadvantages. Try seeking expert advice or speak to your startup accounting provider to see if they can point you in the right direction or connect you to their preferred partners if you are trying to set up your business amidst a pandemic. Moreover, an expert on board can also help you create financial models to help you determine if you are able to repay the loan on time.
If you are seeking financial support, then borrowing funds or loans during a crisis might not be simple. There are thousands of other businesses affected by COVID-19 that might approach a business loan. Therefore, you have to reassure and convince the lenders that your business can return the loan, with interest, on time.
Account for future budgeting early on
You might be required to inject more money into your business to earn more money once the crisis is averted. For instance, if you plan to take on new employees or approach the ones you laid off during the crisis, then you have to spend more money on training and hiring them. You might have to pay more money to purchase additional inventory to meet the growing business needs once the pandemic is over. Also, you might be required to inject more into your marketing projects to enjoy a fresh new start in the industry.
Your recovery plan can prove to be much more effective if you have accounted for things that are most likely to cost you a fortune earlier than anticipated. Your target should be getting rid of the monetary waste and working on an operating budget which is leaner than before. You can then take maximum advantage by investing whenever a lucrative growth opportunity shows up. A successful business uses different tools like a balanced scorecard, the SWOT, and PESTEL analysis to tackle unforeseen challenges.
Some experts suggest that business owners can defer their salaries or ignore any commission payments during this time. Your capacity to defer your salaries might depend on your financial circumstances, like savings, bills, and rent. However, if you can afford to keep some salary aside for the business, then you should do that.ย
Set up a business recovery timeline
Running a business is all about patience, persistence, effective decision-making, and consistency. You might have a long list of things you need or want to do in mind soon after the aversion of the crisis, but you have to be patient as recovery time may take longer than expected. Instead of waiting for things to get right, you can start working on a timeline that lets you identify the most critical aspects of your business and start working on them accordingly.
ย For instance, your most important short-term goal is to get enough funding to help you meet your daily business costs. Once you acquire the funding, you can then set a timeline for training, hiring, or rehiring employees. Similarly, you can set a timeline for restocking inventory and also your business’s reopening if your business was not allowed to operate as a result of the crisis.
The road to recovery is a long and rough path, so you need to take one step at a time. Don’t forget to track business progress as you move along. By keeping track of your progress, especially when you have acquired the desired level of funding, you will be able to prevent your business from engaging in low-return investment activities. During the early stages of business recovery, you must check your business on a daily or weekly basis. It will help you recover your business by tracking the performance of the plan. You can then carry on with your normal schedule of business evaluation every month once the company is back on track
Video: 10 Benefits Of Business Continuity Planning
Watch this video to learn 10 additional benefits of a Business Continuity Plan that can help your business.
Build a contingency plan for Business Recovery
As an entrepreneur, you have to adopt a more forward-looking approach. An approach that lets the business anticipate any possible crisis and the business circumstances resulting early on. The Coronavirus pandemic may seem like a crisis that will never return once it is over. However, it’s realistic to consider various emergencies that may arise and disrupt your business practices in the future. Learn the lessons the current crisis has taught you and implement those lessons in your contingency plan to help tackle future problems effectively.
You must set aside some amount of liquid savings so that you don’t face cash flow problems like the ones caused during this pandemic. Pay attention to debt payment or cutting down non-essential costs to make your budget more effective for other functions of your business. You can introduce innovative techniques to increase your staff’s productivity to produce more and spend less in the future. Letting your employees work from home and implementing these practices in your business model is an indicator that your business is fluid and can cope up after any disastrous experience.
Being an entrepreneur means you have to think out of the box, as the future of your company and employees lies in the decisions and actions you take. It’s always good to keep backup plans to decrease the probability of termination and increase the capability of the business to get back on its feet once everything returns to normal.
Seek an accountant’s expertise
The chances are that your business expenses might increase once you are on the road to recovery post-COVID-19. You might come across a new set of challenges after the crisis is averted and might demand more attention towards them. But since the financial aspect of your business is one of the most crucial ones, you must leave it at the behest of a financial expert like an accountant.
Recovery Specialists from the best accounting firm near you will help you get on top of your finances. They can do so by helping you organize your financial records, update your company’s account, file accurate tax returns, and prevent you from facing fines and penalties. They can also help you identify potential tax reliefs to help you save some extra money.
Moreover, you need an expert to guide you during difficult times and someone always ready to present you with unlimited solutions to any problem your business faces. By hiring a capable chartered accountant, you save more time to focus on other value-adding activities of your business.
Clear House Accountants are value-driven Accountants in London who specialize in helping businesses grow in times of prosperity and in tough times. We provide 360 solutions that help businesses face difficult situations head-on with smart solutions and effective strategies.
