The indicators are pointing to troubled times ahead, especially for some sectors: rising costs, falling confidence, and lots of uncertainty. If you are in one of the sectors affected, take these eight steps to maximise your chance of survival.
1. Cash flow: Do two cash flow forecasts covering the best case and worst case scenarios. Use the worst case for your planning, but also focus on any revenue opportunities in the best case scenario.
2. Payments: Stop any payments that are not absolutely business critical, including even the smallest direct debits and standing orders. This cost control checklist may help.
3. Taxes: If you are struggling to pay any kind of tax, including VAT and PAYE, call the HMRC helpline. HMRC are extremely helpful and a 'Time To Pay' deferment may well be possible.
4. Finance: If you can demonstrate that your business is viable in the long run, you may well be able to open (or increase) a bank overdraft. But a lack of sales mean that many businesses will struggle to demonstrate viability. And in any case, many business owners want to avoid increasing their future liabilities.
5. Rates: There are various business rates relief schemes for businesses in particular sectors (eg retail, hospitality, leisure) and those already eligible for small business rate relief and rural rate relief.
6. Negotiate: Some suppliers will be prepared to agree delayed payment terms. Conversely, you may be asked to extend credit to your own customers. Work hard on collecting any payments owed to you.
7. Team: Parting company with a poor performer not only saves a salary, it can sometimes transform the morale and productivity rest of the team. Now is the time to take a long, hard look at whether you can shrink the team. Making a position redundant in times of financial difficulty is relatively straightforward compared to dismissing an established employee when a business is going well.
8. Optimise: Get all your staff, including homeworkers, set up properly so that they can work together effectively. Use any collaboration tools you already have and any suitable new apps.
Having taken these eight steps, you may decide that the business is going to collapse regardless. In this situation, you will need to plan for insolvency, choosing the best way to deal with your particular circumstances.
Copyright 2022. Article written by Rory MccGwire, Atom Content Marketing.