Recovering a small business after Covid-19

The Covid-19 pandemic has had a profound impact on the UK economy, suffering an 20.4% fall in GDP in Q2 2020. Government forecasts predict that the economy won’t be back to pre-pandemic levels until at least 2022.

Coronavirus hit small businesses particularly hard, with a catalogue of challenges according to research by the British Business Bank. From declining revenue and increased redundancies to stressed cash flow and uncertainty about meeting payments, new business owners have had to pick their way through a pandemic minefield that has impacted people, profits and the wellbeing of business owners.

However, thanks to the national vaccination programme and government intervention through loans and grants, small businesses are starting to plan for growth and success as the UK relaxes Covid-19 restrictions.

Planning to recover and thrive

While you may feel battered by the Covid storm, easing restrictions and access to funding initiatives could see your business sail into calmer waters, start to recover, and prepare to grow and thrive.

Emerging from the pandemic involves ensuring your business is on a sound financial footing. You’ll need to plan for the future, including taking advantage of new opportunities – such as digital distribution and remote working – that the pandemic has created.

With some careful planning and access to support and funding, you can get your business on the front foot and ready to take advantage of future economic growth as customer demand returns back to something close to pre-pandemic levels.

Post-Covid business survival checklist

From getting your cash flow in order and accessing financial support such as grants, to rethinking your workforce and looking after your wellbeing and health, it’s a good idea to work through a survival checklist so you’re in the best possible position to bounce back.

By working through your business priorities – starting with the financial health of your business and ensuring the fundamentals are sound – you can then scan the horizon for future growth opportunities.

Here’s our post-Covid business priority checklist.

1. Sort out your business finances

Your biggest priority is to be on top of the numbers when it comes to finance and money. Take time to rigorously examine your cash flow and create a forecast for the next six months. Ask yourself what cash is coming in, what assumptions you’re making and what cash reserves you have.

If your business has been reliant on government support, such as the Job Retention Scheme and business rates relief, these will be tapering off and you’ll need to ensure you have the cash to hand to plug any holes.

Talk to any lenders to negotiate loan repayment holidays or better credit terms with suppliers to help cash flow in the short term.

Cast a forensic eye over expenses. Identify where your business is spending money on expenses that aren’t necessary. List all expenses and decide which you can prune, which you can reduce such as with cheaper suppliers, and which expenses are essential and need protecting.

2. Take advantage of support schemes

The UK Government provided a range of financial support schemes during coronavirus. While some are closing, remaining schemes can help with incentives such as deferring tax payments or getting access to business loans.

The Government has a guide detailing up-to-date financial support for business during coronavirus.

Current support schemes include:

• Job Retention Scheme – This scheme pays a percentage of an employee’s salary if they are placed on furlough, and is set to run until 30 September 2021.
• Time To Pay – HMRC may allow businesses to spread tax payments for corporation tax, VAT and PAYE over a longer period to help company cash flow. Applications are treated on a case-by-case basis.
• Business Rates Relief (England) – Some businesses such as retail, hospitality, leisure and nurseries offering childcare may be eligible for business rates relief, with the scheme running until 31 March 2022.
• Business Rates Relief (Wales) – The Welsh Government is continuing to provide support into 2021–22 to help businesses and charities in Wales during the pandemic.
• Non-domestic rates relief (Scotland) – Relief for the retail, hospitality and leisure sectors will be available until at least 31 March 2022.
• Help with small business rates (Northern Ireland) – Eligible businesses will pay no rates for the full financial year from 1 April 2021 until 31 March 2022.
• Recovery Loan Scheme – Provides support for businesses of all sizes to borrow between £25,001 and £10m, with the Government guaranteeing 80% of the finance. The scheme is open until 31 December 2021.
• Self Employment Income Support Scheme – Provide payments to self-employed businesses that have been impacted by Covid with payments awarded based on previous tax returns to HMRC. The scheme is open until 30 September 2021.

 

3. Apply for business grants

Grants can provide a much-needed cash injection without the need to repay the money. There are numerous grant schemes run by the Government, local councils, charities and commercial organisations. Many grants are aimed at specific industries or regions and range from a cash sum to discounts on equipment, such as money off broadband installation, while a few are Covid-19 specific.

Current grant schemes include:

• Additional Restrictions Grant (England).
• Financial support and grants (Wales).
• Coronavirus (COVID-19) business support funds (Scotland).
• Support for your business (Northern Ireland).

 

4. Know the legal situation

The legal situation and government guidance for businesses varies in England, Wales, Scotland and Northern Ireland. Some nations will have different restrictions in place, such as mandatory face coverings in retail stores.

Make sure you are aware of all guidelines and restrictions involved in making your workplace secure and Covid-19 safe, including any advice in terms of social distancing measures, bubbles and staff isolation should an employee contract Covid-19.

You can find the latest guidance for businesses on working safely at:

• Working safely during coronavirus guide (England).
• Keep Wales safe at work guide (Wales).
• Coronavirus (Covid-19): returning to offices guide (Scotland).
• Coronavirus: Guide to making workplaces safer and priority sector list (Northern Ireland).

 

5. Evaluate your workforce needs

With staff costs one of the biggest overheads for businesses, you’ll need to critically assess your workforce needs, where and how they work, and the types of employees and skills you need.

The pandemic has meant new ways of working, and you may want to continue some of these. Lower customer demand and business activity might also mean you’ll need to reduce employee numbers. Think about future growth and whether you’re likely to see a surge in demand, and plan staffing accordingly.

You should communicate clearly with employees about your plans, and listen to feedback on working, travel to work, and the use of virtual and non-virtual workspaces. Clearly communicate any policies, and put in place handwashing guides and hand sanitiser.

You may be eligible for financial support and grants for employment, including incentives for taking on apprenticeships and trainees:

• Kickstart Scheme (Wales, England and Scotland) – Provides funding to create new jobs for 16- to 24-year-olds on Universal Credit who are at risk of long-term unemployment.
• Traineeship Scheme (Wales and England) – Claim an employer incentive of £1,000 when a work experience placement of over 70 hours has been completed.
• Apprenticeships (England) – Increased financial incentives for hiring an apprentice run until 30 September 2021. Different schemes operate for Wales, Scotland and Northern Ireland.
• T Levels (England) – A new alternative to A Levels that offers employers £1,000 for work placements of around 45 days to 16- to 19-year olds.

 

6. Sort out your supply chain

Covid-19 hasn’t just impacted your business. Suppliers of all sizes have been dramatically affected, and it’s a good idea to speak to critical suppliers to gauge their financial health, operational capability and their ability to deliver.

Some suppliers may be keen to offer discounts. Negotiate with existing clients to get more favourable terms, and be prepared to shop around for a better deal. Look for alternative suppliers as a fallback and make a plan on what you’d do if pandemic restrictions were reimposed.

7. Double-down on digital

The coronavirus pandemic has highlighted how digital technologies and platforms can help firms become more effective. Digital has also opened up new ways to reach customers and created new business opportunities.

• Digital working – Examine how virtual working technologies such as remote working, video conferencing and shared online collaborative tools can mean staff can work flexibly and remotely, potentially reducing the need for workspace.
• Digital opportunities – Customers are increasingly switching to digital services, opening up new business opportunities. Brainstorm how your products or services could be delivered digitally. From creating digital versions on physical services, such as instructor-led learning moving to virtual classrooms, to simply creating an e-commerce store to sell your products, the pandemic has made online buying the norm.

 

8. Get support

With the pandemic forcing people to work from home and resort to video calls to keep in touch, it’s important to seek out as much support as possible – both in-person and virtual – as you reopen your business. Emotional support and help with mental wellbeing for you and your employees should be top of your list.

The Federation of Small Businesses has a guide for small businesses on managing mental health concerns and where and how to find help.

9. Capitalise on changing customer needs

Customer needs and spending habits have been changed significantly by the pandemic. While digital delivery and online shopping are obvious changes, customers are increasingly shopping locally and seeking products and services that can be delivered to the home. With travel restrictions in place, local UK holidays and breaks are enjoying a surge in demand, but expect overseas travel to soar in 2022.

10. Embrace change

Start-ups need to be flexible. While the pandemic has seen incredible impacts across society and business, embracing change and mentally gearing up to meet the challenges it presents can boost your chance for success. A positive attitude can help you regain momentum and position your business for post-Covid success.

Disclaimer: While we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.