How to put your business on pause
Date: 24/03/20 | Author: Sean Toomer | 0 Comments
With the new rules in place restricting movement and effectively closing the majority of businesses, we've put together our tips and advice on how to put your business on pause and the kind of things you should be doing whilst it is.
Stay at Home!
The new message is clear. Stay at home. This has now had a knock on affect to almost all industries and all businesses are facing a restriction in trade either by physically closing, planned jobs cancelled or loss of clients/income. Therefore, for many, many small businesses, the only option is to press pause on their business, until such a time the world returns to normal and they can pick up where (hopefully) they left off.
Get your Cashflow straight
The first step is to understand where this leaves your business in terms of cash, what you have to pay and what you don't. There is lots of support being offered in terms of Business Rates Grants, Low Interest Loans, 'Furloughing' Staff and more. For an update on these, and what you can get, see our previous posts here. Once you're clear on what help you can get, you need to get this down in a cashflow forecast to see where there is any gaps in cash. If you're a client of ours, you can do this for free using Fluidly. Find out how here.
If you're not a client, we've designed some free downloads to help you which can be found here.
Contact your Mortgage Provider or Landlord
The next step is to start to work out how you're going to meet your biggest costs. The first of which is rent. If you're in the retail game, or have a business premises of some kind, you'll most likely be in receipt of a Business Rates Grant and have relief from paying business rates for the next year. If not, or, even if you are, get in touch with your Landlord. They should be able to obtain a mortgage holiday, which they are expected to pass onto their tenants. You most likely won't receive a rent-free period, but a payment holiday during your pause period is a bonus. They will be expecting this call, so don't be too nervous and just have the conversation. Most Landlords have been supportive in this.
If you have a mortgage on your business premises, contact your provider and ask for the payment holiday. This will help no end during the period your business is paused.
Next is your team. With the business on pause, you'll most likely need to 'Furlough' your staff. This essentially means they'll be taking a leave of absence and are not required to work. You're expected to pay them as normal, and then claim back 80% of the wages bill from the government. This is a massive help and is much better than sacking your staff, so at least they are there when the business resumes.
You're only required to pay the 80%, you can 'top-up' the remaining 20% if your cashflow allows, but it's not obligatory. You also can't ask your staff to work during a period they are furloughed.
The issue you might face here is timings. The system to obtain the 80% from the government is not expected to be live until late April, whilst the above is effective immediately. Therefore, you're expected to plug the gap in the meantime and pay staff wages, until you can get the 80% reimbursement back. If it is the case that you can't pay this as you just physically don't have the cash (hopefully identified in your cashflow forecast), you'll be expected to try and obtain assistance in the form of a low interest loan, overdraft or other funding facility until the repayment of wages is made. A full list of the accredited providers can be found here.
Keep paying the small stuff
Now you've got your two biggest costs covered (I haven't spoken about stock, because if you're closed, you won't be buying any), it's important to keep the small bills being paid wherever possible. If you're covered for staff wages and rent, any current cash you have available, or the grants you might receive, need to go towards paying your small monthly bills, such as telephone, internet, computer software, your accountant (I know it's tacky, but seriously, we're pretty important right now). The idea is to keep the economy flowing as much as possible and if everyone starts holding onto every penny they have, this won't happen. Plus, you'll mostly likely still need these services, even if you're closed.
Your business is on pause, it's not dead
Keep it alive. Even though you're facing an impossibly tough task here, and it's downright horrible, you need to do everything you can to keep in touch with customers and clients during this pause period. Keep posting on Social Media, if you've got left over stock which will be spoilt, give it to charity for some PR, paint a rainbow on your window. Just do whatever you can to keep in the minds of your customers so when everything is back to normal, they still know who you are and what you do.
It might also be a good time to get on with some business planning. I imagine there will be a time soon when the dust settles slightly and you'll have some time on your hands. This could be an ideal opportunity to look into implementing new systems, new services and more into your business which you've previously not had the time to do.
What about me and my money?
Even though the unprecedented amount of support being offered by the government will sustain your business whilst we face this, it won't necessarily support you. If you're like our clients, you'll be self-employed or the Director of a Limited Company with small salary and dividends. Right now, the only real option available to you is Universal Credit at £90 per week - which is not enough. However, we expect an announcement by the end of the week which will offer more support to the 5 million plus self-employed individuals out there who are so very vital to our economy.
For now, we'd recommend getting down your personal monthly costs, and seeing how Covid-19 is going to affect you. We've got a free download on our website that will do this for you. It's here.
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