Don't make a big mistake
Steve Carey
Owner at Vanguard Business Solutions Limited, still one of the world's "Most Inspiring Accountants"
As the re-opening of the UK economy gathers pace, there's a real temptation to rush to re-open. However, that could be a fatal mistake.
OK, so I know we are all desperate for "normality" but have you stopped to consider the cost? or the potential benefits?
- There's an investment to make in getting premises and practices COVID19 secure. Have you costed that yet? Do, as this is an investment decision just like any other.
- The possibility of losing certain help must be considered. The Self-Employed Income Support Scheme ("SEISS") requires a claimant to have been adversely affected by COVID19. While this may be the case now, the second tranche requires that to be the case, after 14 July 2020. If you have re-opened, can you honestly claim that? (my view is that most will, but not all). Claims for state credit may be linked to the hours you work. Universal credit is income-related, and you may face a clawback if your income suddenly recovers. Bringing back employees will limit the furlough payment you can claim, even though the flexible furlough scheme ("FFS" - can you believe that acronym?) will mitigate some of the damage.
- Will your anticipated income be enough to cover the additional costs. As with any investment, does the payback justify the initial outlay? Retailers are reporting that footfall is still 40% below last year's level. At 60% of normal income, is your business viable? Don't forget it should be paying you a wage as well as your suppliers and staff.
So, what should I do as a business owner?
As well as preparing your premises, you should prepare a cashflow forecast. This will show you what you can expect. Ideally, you should produce a forecast covering 12 weeks, 6 months and 12 months, based on three different assumptions; "business as normal", sales at say 50% of normal, and sales at a much lower figure. (I would use 25% as a guideline).
There are massive risks in getting caught up in the frenzy that is lockdown easing. Take care to make your business decisions in a rational way, however much you'd like it to be OK.
Risk-taking has always been part of owning a business, but it is of vital importance as emotions grip the business community.
Doing this sensibly will give you the best chance of survival, and could spare you and your loved ones the regret of jumping on the (uneconomic) bandwagon.
If you need help with any aspect of this, please get in touch. I'd love to help build a stronger business for you.