The ongoing covid-19 has had an enormous impact on just about every part of economic life. For those running small businesses, it’s been a time of great uncertainty. The Job Retention Scheme announced by the chancellor provided some support – but it’s expected to be phased out in increments at the end of the summer, which means that employers will need to find a way to wean themselves off life support and stand upright as soon as practically possible.
For many businesses, short-term success might be to stay afloat and remain viable for the years to come. So, what steps might small businesses take to keep themselves going? Let’s take a look.
A cash-flow problem can be lethal to small businesses. Without the cash available to pay staff and suppliers, the entire enterprise might come grinding to a halt. With the Bank of England having lowered the base rate of interest to rock bottom, there’s never been a better time to borrow. It’s not just high-street banks that might be able to lend a hand: small business loans are available from online lenders, each of which is regulated by the FCA.
The Bank of England’s chief economist, Andy Haldane, recently expressed a view that the coming recession probably wouldn’t be as bad as many have feared. With that said, it’s still almost certain to be incredibly painful, even if it isn’t the worst recession of all time. As such, we should expect businesses across the economy to reign in spending. Those that do so in a way that’s sober and calculated are likely to fare better than those who are forced to do it at the last minute. As such, conducting a thorough review of your outgoings, with the expectation of far lower custom over the coming year, should be considered obligatory.
Be aware that the situation with the virus is changing every day. Thus, any sales data that you have that goes back to last year should be treated with extreme caution – the world of yesterday simply can’t tell us what tomorrow will bring!
Customers understand that times are going to be tough for small businesses, and thus they’re likely to be more willing to pre-order popular products. You might ask them to pay the full price up-front, or even just a fraction of it in the form of a deposit. This method will help to provide the cash you need to stay afloat.
Get rid of Stock
Businesses in certain sectors, and in particular non-essential sectors, might find soon that their demand collapses. This may leave them with an oversupply problem in the form of a huge stockpile of stock that they can’t shift. Cash tied to inventory is cash that can’t be spent, and in cases where your margins are wafer-thin, getting that stuff sold should form a priority. You can do this by investing in the right inventory management solution, through which you can identify those low-value items, and by discounting them heavily to get them out of the door.