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By Sean Farnell, Partner
While we are by no means out of the woods yet, the end of many restrictions in England from July 19 will be a major day for many businesses.
This couldn’t be truer than for those working in events, hospitality, conferencing or entertainment – and for many in these sectors it has been 16 months of limited or no business.
While virtual events have had some success, it’s just not the same as a physical meeting and sharing a handshake, so it will be great to hopefully get back to events of that type.
But are these industries ready to bounce back? It’s safe to say that the government support has kept many businesses alive and it could be somewhat of a hard slog for them to bounce back successfully.
The good news is that in many cases the government is permitting extended repayments terms and repayment holidays for Bounce Back Loans and Coronavirus Business Interruption Loans.
This will make a big difference. As always cash is king, and you need a strong cash flow to maintain activity and grow steadily.
However, we will no doubt see some businesses overstretch themselves to recoup income – it’s important to remember that cash does not necessarily follow turnover.
Even though the Job Retention Scheme is tapering down, there will be some support from that avenue until the end of September which will help some businesses get back up to speed.
We also understand that HMRC has been advised not to be too aggressive in their chasing of debts and a lot of businesses have already taken advantage of opportunities to run their repayment schedules over a fairly lengthy period.
My personal feeling is that there won’t be any great appetite to force businesses into insolvency for at least 18 months and I think we will see a fairly light touch from the regulatory authorities for a while yet.
However, I’m confident that good businesses will thrive regardless. Those businesses and business owners that take time to plan how to deal with reopening and manage the return to full operations will be successful.
The best thing that businesses can do is keep an eye on what is happening. Understand your business and the nature of demand peaks and troughs, understand the cash flow cycle in particular.
Keep your eyes on the right numbers and be prepared to be flexible to ensure you are here five or 10 years down the line.
It is however great news that businesses will be able to return to normal, and while there are potential risks of overtrading, that is the best problem to have and can be managed.
Many businesses have diversified over the last year or so and introduced new products or services. It’s important that they continue to do these things alongside their traditional income, and they continue to take other opportunities as they arise.
The economy appears to be bouncing back fairly quickly, even in the face of Brexit. It has been remarkably resilient so far, so let’s hope it continues.
There will be challenges over the months ahead, but it’s all in the planning. It would be naïve to assume there won’t be any further disruption.
As we open up more, Covid cases will inevitably continue to rise and with Track and Trace there is a real risk that if an employee tests positive, it’s conceivable that the whole business will have to isolate. That, coupled with the summer holidays, could really bring staffing challenges in July and August.
We are continuing to offer support for businesses through the Peer Networks programme and are ramping up activity for our Business Mastermind Groups.
This period will no doubt bring challenges, and we advise if you experience any of these, or simply want help in developing your business plan and forecasts, to speak with your professional adviser. We are here to support you if required, so please get in touch.