COVID – 19 Six Areas For Businesses To Consider
Published March 16th, 2020: Joe Hinton, the Managing Director and Founder of UK Business Mentoring Group has this message for all business owners.
As the UK Government and Government’s across the world try to tackle the COVID-19 pandemic, business owners will also be looking closely at how it may affect them. This includes how it may affect staff, customers, suppliers and any other key stakeholders.
Depending on the nature of the business/industry, businesses will have different challenges to face, but one thing is for sure it will affect all in some way.
Immediate Business Advice and Support
We are happy to speak with businesses of any size and in any industry to review their challenges and provide advice, guidance and bespoke recommendations – with no obligation to buy anything from us – this is purely an open offer to help to business owners facing challenges in unprecedented times.
Corona Virus Business Checklist – March 2020
We have put together a series of prompts to help business owners with the areas they need to be considering:
- Are staff taking all necessary precautions in terms of hand washing etc?
- How will staff sickness/self-isolation affect the smooth running of the business?
- Is there a contingency to keep trading with fewer staff or can you bring in temporary staff?
- If you have to lay staff off or reduce working hours etc, what is in your staff contracts that covers this?
- If you are forced to close due to Government ‘Lockdown’ where do you stand in terms of paying staff during closure?
- How robust is your supply chain for your goods and services?
- Are there likely to be supply delays? If so, how much stock do you hold? How long can you trade without new stock?
- Are there alternative suppliers?
- Are suppliers increasing prices due to the crisis? (We have heard of one wholesale supplier doubling the cost of toilet rolls, how would a small convenience store explain to its local customers that the new price is not of their doing?
- Do you import? If so what are the implications of late/no deliveries for several months?
- Are you and your staff reassuring customers by “words and deeds” that you are doing all you can and will deliver as normal?
- How is customer behaviour affecting you now and likely to over the coming months?
- Will customers be putting spending plans on hold?
- How are you communicating any changes to your customers?
- Is there an additional/alternative service you can offer to clients at this difficult time?
- Are there customers of yours who would be classified as ‘high risk’ at the moment that you can go the extra mile for? (The authors local shop is currently holding back some supplies of toilet rolls for their elderly/at risk customers)
- If you export, what changes can you foresee, delays, restrictions etc?
- Clearly all of this is likely to have an effect on business profits. Our advice is to forecast your profit and loss (P&L) for the next three/four months based on best- and worst-case scenarios so that you have sight of the potential impact.
- When forecasting (above) look at what costs you may be able to reduce. Can you reduce your cost of sale at all and therefore increase your gross profit?
- Can any of your regular fixed costs be reduced/put on hold?
Know your Sales Breakeven
- If you have done everything to reduce your costs, calculate your sales breakeven point. How much do you need to sell to breakeven i.e. make no profit or loss, just cover overheads. There is a simple formula for this – take your fixed costs per month (or per week) and divide that figure by your gross profit margin %. That then gives you the amount of sales required to ‘breakeven’
A reminder: Gross Profit Margin % = Gross profit (sales less cost of sales) divided by Sales x 100
Cash Forecasting – A Significant Consideration
- This will be the big issue for many businesses. Profit may reduce due to the crisis, but many businesses will run out of cash first.
- Forecast your cash for the next three/four months (note this is different to forecasting your P&L mentioned above, this is to do with the timing of money going in and out of your bank account).
- Again, forecast based on worst case scenario, you may not like what it reveals but it is better to know how bad it could be – it gives you time to do something about it.
- If the forecast shows you will need more cash, consider how you could find that. It may be conventional bank borrowing (the Government announced its 80% guaranteed bank loan scheme in the recent budget), or it could be other lenders or different finance such as “Invoice Finance” (raising cash against your unpaid invoices).
Support & Assistance from the UK Business Mentoring Team
We are happy to take calls from businesses of any size and in any industry to discuss their challenges and give them our advice, guidance and recommendations. There is absolutely no obligation to buy anything from us, this is purely an offer of a helping hand to business owners facing challenges in unprecedented times.
Telephone 0845 680 3634 or find a business mentor near you now.