The outbreak of the Covid-19 coronavirus disease has affected and taken thousands of lives. But it is also having a growing impact on the global economy and possibly your business.

The fact is that just as some people will die from the coronavirus, some businesses will fail. And in the case of businesses, the best precaution is not handwashing whilst singing happy birthday.

So how can your business survive the coronavirus?

It all depends on the state of your balance sheet and what complications there are in your supply chain, but there are a few things businesses can begin to plan now:

1. Utilise all the help that is available from the Government 

The Chancellor announced a £330bn package of guaranteed loans. At the current time we are awaiting exact details of how this will work but in essence it is likely to be a loan from your bank (or maybe another one) which is guaranteed by the government. This is an extension of the Business Interruption Loan scheme announced in the previous week’s budget.

A4G can help apply for this loan. Contact your Principal Adviser on the usual number. 

2. Start forward planning cashflow issues

Cash flow will be the greatest concern for most businesses. Cash may begin to stop flowing but demands for payment continue. You may have little control over debtor payments in the months to come, but you can control your outgoings. Using our cashflow planning tool (which you can download here) you can precisely plan what you are spending on what every month. 

Also have a read of our article on ‘spring cleaning’ your finances which gives you several things to consider like switching utilities, reviewing your direct debits, de-cluttering etc. to reduce your outgoings. 

3. Communicate with your creditors

Although it’s the part that we all fear – talk to your creditors and explain your situation. Transparency is always the best way with your creditors. They want their money back so it’s likely that they will work with you to put together a repayment plan that suits you both, in order to get it. 

It is then essential you stick to your terms and conditions to prevent them potentially issuing a court claim against you.

4. Ensure you are using the best accounts package for your business

The right accounts package is key to preventing cash flow problems. By ‘right’ we mean a software that has the potential to alert you of any problems that are likely to arise, before you find yourself drowning in the middle of it all.

We use Xero, which gives us real-time access to all our numbers, which is the key to being in complete control of your cash flow. The Xero dashboard is a one-stop-shop for all your critical numbers and key performance indicators (KPIs). You can easily see:

  • What your costs are for the month – i.e. your bills
  • What invoices are due for the month and your total income expected
  • Which invoices are overdue
  • An overview of cash in and cash out for each month

Xero, of course, isn’t the only accounts package on offer. There are several factors you might want to consider before you make a choice out of the wide selection on offer today. Take a look at our top three recommendations and our list of pros and cons here.

5. Calculate your real break-even point

The phrase “real break-even point” refers to the level of sales you need to cover your costs and leave enough profit to cover tax and the drawings you need to live on. Conducting a breakeven analysis is vital to:

  • Help set sales targets
  • Identify your required gross profit margins
  • Understand the impact of an increase or decrease in prices
  • Be able to consider whether you need to reduce your drawings

Read more about how to calculate your real break-even point here. 

There’s lots you can do to plan to reduce the impact of Coronavirus on your business. But you have to plan now. During the financial crisis in 2008, one of our longest standing clients said “well it’s what you make it, isn’t it?”

And he was right. It is what you make it. You can choose to bury your head in the sand or you can look to the future and plan how.

Contact your Principal Adviser or call us on 01474 853 856 for support in reducing the impact Coronavirus has on your cashflow.