As a result of the Coronavirus, the UK economy shrank by 9.9% last year, its biggest contraction since 1709 and worse than the economic slumps that followed WW1 and the Spanish Flu.
Whilst no one knows exactly when the pandemic will come to an end, one thing’s for certain – for businesses, the world is not going to be the same.
In July 2020 we outlined seven ways self-employed people and small business owners could protect their firms in the early months of the pandemic.
Now, nearly a year on, we look at five strategies to protect business income as we see out the pandemic and move to an uncertain future.
1. Take advantage of the remaining support schemes
Though many of the government’s financial support schemes are coming to an end, some measures have been extended with others have been replaced with new reliefs. Be sure to stay up to date and find out what your venture can benefit from:
Coronavirus Job Retention Scheme (CJRS)
Furloughed employees’ salaries will continue to be supported by the CJRS, which has been extended until 30th September 2021. Under the scheme, the CJRS will pay for a portion of staff wages up to £2,500 a month.
From April, certain businesses will be eligible for a grant of up to £18,000 in order to help reopen the high street post-lockdown. Businesses eligible will include pubs, restaurants, clubs, hotels, gyms and salons. (Non essential retail businesses will be entitled to a grant up to £6,000.)
Launching on 6th April, the recovery loan scheme will help businesses access between £25,000 – £10 million, with the government providing lenders an 80% guarantee. It is believed that the scheme will run until the end of the year, as businesses begin to recover from the economic impacts of Covid-19.
Self-Employment Income Support Scheme Grants
Applications for the fourth SEISS grant which will cover February – April will also open in April. The fourth grant will cover 80% of three months average trading profits up to £7,500. Later in the year, the fifth and final SEISS grant will open to cover May – September. Eligibility will be determined by a turnover test. For self-employed people whose turnover has fallen by more than 30% will receive the full grant. For those whose turnover has fallen by less than 30%, a grant of £2,850 will be provided.
Business Rates Holiday
Several businesses in the retail, leisure and hospitality sectors qualify for a business rates holiday for the tax year of 2020 – 2021. Though the holiday was due to end in March, it has been extended until June 2021.
After June, there will be a 66% business rate reduction from 1st July 2021 – 31st March 2022.
2. Strengthen your business’s online presence
If there’s one thing the pandemic has taught us, it’s the importance of going digital. Since the pandemic struck, we became increasingly reliant on a virtual world. Thinking long term, building an online presence for your brand is going to be crucial to its survival.
In order to maximise your business income, you will need to find ways to utilise digital spaces, creating and cultivating channels that compliment your physical, in-store offerings.
As a result of advancements in tech, many consumers now expect ease and convenience. Businesses that are able to provide app offerings, a good user experience and clear web navigation are going to be able to get ahead.
We have also come to learn that in an unpredictable world, whatever your industry, you should be considering ecommerce options and be ready to switch your offerings in the event you are unable to meet face-to-face. It goes without saying that digital is an area of your business worth investing in!
3. Careful financing planning is key
With undoubtable economic challenges facing freelancers and small businesses, it’s imperative that you take the time to forecast for different scenarios using projected profit and loss statements. Carefully consider your starting point, and then plan for changes that will help to weather the post-pandemic economy.
In order to be prepared for the unknown, it’s a good idea to create different scenarios. These scenarios should include flat and declining revenue situations.
You should also create projections using expected cash inflows and outflows. When it comes to managing your working capital, you should ensure cash flow best practice. Make sure all processes of management are operating efficiently, including the speed at which you collect your accounts receivables.
One way to do this is through invoice financing. Since the pandemic, Penny has provided countless businesses with a way of accessing cash trapped in invoices. In the same way you may choose to provide a 2% discount to clients who make early payment, you can sell your invoices for a small percentage (in the case of Penny, 3.4%).
It’s a simple way to alleviate late invoice payment stress and ensure steady business income during and beyond the pandemic. Find out more.
4. Assess your business’s position and refocus its aims
Whatever the position your business is in, as we move out of the pandemic it’s wise to regroup and strengthen your team. Invest in your employees and make sure everyone is on the same page when it comes to your business’s goals.
In many ways, this period will provide a good opportunity to hit the restart button and reanalyse what’s important for your business moving forward through 2021. It may be the case that your ethos or message has changed, or perhaps along the way you’ve discovered new values that you want to tie into your company culture.
Whatever the changes are, it’s important that your workforce is aligned and more motivated than ever to make your business a success.
5. Never forget the importance of flexibility when it comes to agility
In a pre-pandemic world, working 9 – 5 in the office was the norm for many. However, for coming up to a year now, the British public has adapted to social distancing measures which has included working from home.
Businesses have had to adapt too, and ensure their IT systems and structures are set up to cope with considerable remote work.
In order to protect your business’s income moving forward, it will be important to consider these ways of working. Perhaps you’ll move to a permanent work from home scenario for some, or even all of your employees. Maybe you’ll find other ways to cut costs for your business, such as downsizing your office space or improving your energy efficiency.
Whatever you do, in order to retain employees and pursue opportunities to increase your income, you need to move with the times and keep flexibility in mind.
Opportunities lie ahead
As they say, out of uncertainty comes opportunity. Despite the challenges that lie ahead, there is room for resilient and innovative businesses like yours to not only survive, but to grow and thrive.