For the majority of businesses, 2020 did not go as planned, with many reporting huge downfalls in profit and even facing financial ruin. Three lockdowns (and counting) have meant that a large proportion of SMEs have had to close their doors and even those that have been able to remain open have found themselves struggling due to supply chain disruptions.
As we began to grasp the gravity of the situation last year in the UK, most organisations scrambled to put together a business continuity plan (if you’re yet to do so, check out our guide on What Your COVID-19 Business Continuity Plan Needs To Include), but additional effort needs to be made for long term stabilisation now that COVAX is in full swing.
We look at the various steps your business can make to enable the transition to the new normal a lot smoother in the coming months.
1. Evaluate Finances
It might not look pretty right now but assessing the financial damage your business has sustained due to the pandemic is a task that can’t be avoided. The first step is to update important financial documents, such as your profit and loss sheets, as well as your cash flow forecasts. Comparing them to documents produced in 2019 will enable your business to see exactly how much of a hit it’s taken financially and with that information, you can then identify how to best move forward.
Back in November, we asked over 1000 businesses if the COVID-19 pandemic had impacted their business’s savings pot and 80% responded saying yes. Of that number, over a third used their savings to pay overheads to keep their business afloat, over a quarter used the savings to pay staff and 13% used the money to get the business online.
Of our respondents, only 39% felt they had enough savings to get through the remaining impacts of the pandemic – and that was before we were plunged into a third lockdown. Covid has delivered a devastating blow to the cash flow of millions of businesses, but being proactive and securing additional finance to help recover is one of the most important steps a business can take right now.
There are plenty of government schemes available to help businesses across the UK survive this third lockdown. CBILS loans have proved to be the most popular option and with a Nucleus CBILS loan, your business can borrow between £50,001 to £250,000 and pays nothing for the first 12 months.
2. Safety First
The world is a different place now and your consumers will have evolved as part of that change. Safety is now a fundamental part of our everyday lives and your customers will want to feel safe when using your products or services.
When we emerged from the last lockdown, many businesses had transitioned to an entirely cashless operation and only accepted payment through card terminals. It’s certainly a good idea to implement contactless payment methods if you haven’t already and your business can unlock SME funding such as a Business Cash Advance by making card transactions its primary payment option.
For those in hospitality and retail, the bar will be set even higher for ensuring safety. Providing hand sanitiser stations throughout your premises is one simple way to demonstrate that your business is taking its responsibility to keep its consumers safe but of course, you can always do more. Investing in temperature scanners and having employees screen every individual entering your business premises is a great way to prevent an outbreak of Covid at your locations. If you run a large store or warehouse, consider introducing a click and collect operation to allow your business to control the number of people present in its stores at any one time.
Our research found that over a fifth of businesses used their savings pot to ensure their premises was Covid secure, so that indicates that providing a safe environment comes at a cost. But there is no need to worry, as there is plenty of business funding available to support this costly but necessary step in your business operation.
3. Have Provisions In Place To Protect Your Employees
As the world slowly starts to open back up again, it’s not just your customers that need to be protected. Every business owner knows that its employees are at the heart of everything it does and without a healthy, reassured workforce, your business will struggle to bounce back.
You will no doubt find that workforce levels need to be adjusted to allow for the appropriate social distancing measures. For restaurants, that will mean fewer customers AND fewer employees present. To help offset the need to make redundancies, your business can access the Coronavirus Job Retention Scheme until the end of April 2021.
Temperature control checks will not only help protect your customers but they will also allow your employees to stay safe whilst at work.
Additionally, if any of your employees start to show symptoms or fall ill, your business needs to be robust in its response – quarantine is non-negotiable. Reassure your employees that they will receive Statutory Sick Pay (SSP) should they either contract the virus or have to self isolate.
Though of course, the government have also encouraged businesses to transition to a remote operation, so where your employees can work from the safety of their homes, make sure they do.
4. Adjust Your Business Plan
Out with the old and in with the new. Your business might have come up with a flawless business plan 12 months ago, but the reality is that it is most likely outdated, with many aspects simply no longer relevant or accurate anymore.
To do this successfully, think about your new business plan as your relaunch blueprint. The tools and assumptions your business usually uses to determine what direction to push towards might no longer be effective, so the answer is to change tact. Go back to basics, think about how your business approached growth previously – refine operations to cover what you’re best at, then slowly add in additional products or services when you have the finances, resources and manpower to do so.
5. Revitalise Your Marketing Efforts
This won’t come as a surprise to any of our readers, but it’s important to hit the message home anyway – consumer behaviour has changed drastically since the pandemic began and as a result, your target audience might now be totally irrelevant.
As with any marketing strategy, do your analysis, identify whether your products/services are in demand and then establish exactly who you should be marketing to. It’s likely that you need to change tact when marketing to your existing customer base, but it is also possible that you will need to market to an entirely different target demographic altogether.
Remember, the best place to start is by working out the pain points of your customers and how what your business offers can alleviate them. Once you’ve got to grips with that, marketing effectively will become a whole lot easier. The pain points of last year could be very different from those experienced today, so get into the mindset of your target audience and plan your marketing mix accordingly.
6. Alter Your Budget With Additional Spending In Mind
Money may well be tight currently, but without splashing the cash, your business could be at a standstill with regards to making the profit it needs to recover following the pandemic. Sadly, it’s a time where digging deep is essential, as there could be a lot of costs that were not originally anticipated.
For example, if you’re in hospitality, you might need to purchase hefty amounts of stock to get your restaurants running properly again, as the food you planned to use will have probably spoiled.
Equally, despite the government Coronavirus Job Retention Scheme, many businesses were still forced to lay its workers off. Consequently, these businesses will find themselves faced with additional costs as the economy starts to recover, including rehiring for those positions and providing the necessary training.
Create a new budget that takes into account each of the costs your business didn’t predict when planning the year ahead 12 months ago.
7. Consider A Pricing Strategy Overhaul
You might be tempted to increase the price of your products in an effort to recuperate as much lost profit as possible, but it’s likely that this will only make matters worse. Consumers will be tightening their purse strings too, given that many have been negatively affected by Covid-19. With so many redundancies and a lot of employees receiving a reduced salary through the furlough scheme, your business is up against the tide when it comes to generating a good level of sales, especially if your company provides non-essential items.
Recognising a drop in demand and changing prices to account for this is one way your business can bolster its sales. It is likely that your customers or clients will be wanting discounts and if your business refuses to provide them, you may well find yourself being drastically undercut by other cost-savvy competitors.
Alternatively, if your business is not keen to drop its prices, it could consider providing discounts instead. This way, you can retain more control over your profitability during an unstable time and when things start to stabilise once again, you can simply reduce the discounts provided, resulting in fewer objections from customers over the change in price for your products or services.
Whilst in many ways it has felt as if the world was quite literally ending (and your business along with it), it’s vital that you keep pushing as there is light at the end of the tunnel. 2020 may have caused your business to feel like its drowning and perhaps maybe it was! But there is hope as well as help out there for the UK’s SME landscape, you’ve just got to be proactive when looking for it. Keep pushing forward, see the value in the future of your business and do whatever you can to ensure it has a flourishing journey ahead.
10 February, 2021