coping with the crisis (Pt. 1)

Practical advice for small business owners during the
COVID-19 pandemic

By Tanvir Hassan

If you’re sitting at home, staring blankly at the TV when you would normally be out there making it happen, be assured you’re not the only one. Coronavirus has been especially unkind to smaller businesses, but if you’re anything like us here at Attract, you’ll do whatever it takes, to not only survive the crisis, but bounce back stronger than ever. Join us in this two-part series where we explore how SMEs can help themselves.

Welcome to the COVID-19 landscape. It looks bleak and barren (like something out of a post-apocalyptic movie). As we sit in our homes, isolated from the world, it seems the only news to be shared is bad news. Whilst ‘big business’ knuckles down, cuts its losses and taps into stored funds and investments; businesses like ours aren’t in such a position of luxury. Whilst we watch the big ships sail away, its all-too natural to feel a little seasick as we are thrashed from side-to-side by waves of despair in our little dinghies.

But to sit idly in despair is a dangerous thing. The more we talk about the negative impacts coronavirus will have on our livelihoods, the greater the chance it has of becoming a self-fulfilling prophecy. The present climate presents some novel challenges for your business and for many of us, this is a genuine fight for survival. By facing the problem head-on, you are presented with some unique opportunities, and how effectively you capitalise on these could be the difference between sinking and swimming. Using this time in the most effective way possible, you are not only increasing your chances of survival, but also your chances of prosperity and success in the future.

In the not-so-distant-future, when the pandemic has ended and COVID-19 is under control, we will be presented with yet another unique landscape with its own distinct challenges. The work you do for your business now will be crucial to how you perform then.

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We have compiled some advice to get you thinking and help you through the present challenges and to set you up for the future:

1. Batten down the hatches!

Your business can only continue exist if it is profitable, so the first port-of-call is to figure out your finances. Spare no detail in identifying which avenues continue to generate revenue and where you’re spending, with a view to cut down on anything that is not essential for you to continue to trade: put profit first!

Are you subscribed to services that are a luxury rather than a necessity? Could you be paying lower rates for your utilities? Our friends at D&K Accounting have put together a clever little spreadsheet to help you with the following activity.

Download all your bank statements from the past year and label each expense as either P (profit driving), R (replaceable) and U (unnecessary). Cancel everything labelled U immediately. Consider how much you need of everything you have labelled R and either negotiate/search for a better deal or cancel. Similarly, try to see if you are able to get a better deal on anything labelled P. Be as objective as you can when doing this; it’s easy to feel ownership over something you’ve been paying for, but unless it’s critical for the business, it needs to go.

2. Keep the conversation flowing.

The most valuable resource you have right now is your existing customer base. All that data you collected over the years represents a pool of customers with whom you have already formed a professional relationship. This data is rightfully yours (within the parameters of GDPR) and can be used in several to help keep your business afloat.

In theory, the more noise you make, the more visible you will remain and therefore increase the likelihood of maintaining business with these customers. However, it would be advisable to be sensitive during this time. Carefully consider your tone-of-voice and the frequency of contact with your customers, since this is a stressful time for many people and the last thing you want to do is upset them or put them off from doing business with you in the future.

Now here’s the important part: everybody’s inbox, including yours no doubt, was flooded with a wave of bland, COVID-19 related emails, almost as soon as the crisis was underway. I also imagine that after reading the first few, you stopped opening them. Am I right?

Bland, irrelevant communications are not the way forward. Offer value with something useful, or entertaining. If you’re a pizzeria, suggest recipes on how to make delicious pizzas at home. If you’re a hairdresser, recommend advice on self-care during lockdown. If you’re a takeaway, advertise that you’re offering cashless payment and contact-free delivery. These are just a few examples of many.

3. Tap into some of the help which is available.

With daily press releases, it is somewhat difficult to keep track of what financial help has been made available for small and medium-sized enterprises. Like you, we have been following the news closely and this is what we have found so far:

Business Rates Relief. If your business has a premises, it is most likely one of 900,000 properties that have been approved for full relief from business rates. This includes the retail, leisure and hospitality sectors but excludes the pub trade (they have offered a £5000 discount instead). If you trade from a premises but do not pay business rates, you could receive a grant of anywhere between £3000-£10,000. The government have advised that they will be in touch with you, although we would recommend contacting your local business rates authority for further information – it is most likely that they have a team in place, ready to offer support for businesses.

“Time To Pay” tax delay. If you cannot afford to pay your tax bill, HMRC will allow you to apply for a “time to pay” agreement. This is negotiated on an individual basis and HMRC will waive the usual 3.5% annual interest that is normally charged to deferred tax payments. We recommend applying for this as early as possible, as it is projected there will be a high number of applicants. There is also a scheme for VAT deferral for payments due up to 30th June. Find out more here.

Coronavirus Business Interruption Loan Scheme (CBILS). The government has agreed to guarantee debt for loans for small businesses, starting at £25,000 in a bid to encourage lenders. Further information on this scheme is available here. These loans exist to support businesses which would be viable under normal circumstances and are losing revenue or seeing their cashflow disrupted as a result of the COVID-19 outbreak. You are advised to apply through your normal business bank, who will be issued with a government backed guarantee and offer you 12 months interest-free.

Coronavirus Job Retention Scheme (“Furlough”). If you pay your employees through a PAYE system, you can claim for 80% of their wages (a maximum of £2,500 per month) to continue to pay their wages, whilst they are on a leave of absence. They also cover the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions. The scheme can be used for any employee that entered the payroll scheme on or before 28th February, 2020. Further information is available here.

Self-Employment Income Support Scheme. The government are also offering a grant to people who are registered as self-employed. The scheme allows self-employed persons to claim a grant worth 80% of their trading profits (up to a maximum of £2,500 per month) for the next three months. You must have submitted an Income Tax Self-Assessment tax return for the tax year 2018-19, been trading in 2019-20, continuing to trade in 2020-21, and have lost trading profits due to COVID-19. You cannot apply for this scheme yet, but further information is available here.

Industry Specific Grants. If your business falls within the retail, hospitality or leisure sectors,f you are among the hardest hit industries. There are two forms of relief which have been made available to you. For businesses with a rateable value below £500,000, you are eligible for 100% relief from business rates for the 2020-2021 tax year. Cash grants of £25,000 are also available for businesses in these sectors with a rateable value between £15,000 and £51,000. Similar grants are available in Wales, Scotland and Northern Ireland but with different thresholds. Find out more here. Help is also at hand if you run a nursery business in the form of a business rates holiday for the 2020-2021 year. Contact your local authority for more information

Note: This information in this is correct at the time of writing. For the most up-to-date advice on how to seek help during the COVID-19 crisis, visit the website.

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