By leading business expert and coach Erica Wolfe-Murray
Early yesterday morning I had a call from an ex-client offering effusive thanks that my firm instruction that she should shelter six months’ overheads cash in a separate account meant that her world wasn’t falling apart. This was all despite her protestations on several occasions.
Yes, the coronavirus outbreak in the UK and subsequent lockdown on all non-essential retail has been detrimental to thousands of small businesses. There are those companies that are thriving and others that are facing total destruction and despair.
One thing is abundantly clear: those with money in the bank have more options than those that don’t.
So, if you’re one of the businesses with minimum cash flow, what can you do to ensure your survival?
Develop an online business, fast
If you relied solely on footfall to a bricks-and-mortar store that is now closed, you need to get trade up online as a matter of urgency. There may be less cash circulating in the economy, but you want a share of what there is. Use social media inventively to generate revenue. Be less concerned about margins, price to sell as this will bring ready cash into your business.
It’s a highly competitive space, so really set yourself apart. Don’t just focus on national or even international sales, look to local. People are looking to support small local business, so see what your Chamber of Commerce or other local networks there are.
Mailing lists have good sales response
Use your mailing list to generate interesting newsletters. Anyone who has asked for your newsletter expects you to use it to keep them informed, let them know of great offers, competitions etc. Get cracking – it could generate cash income quickly.
Review all your outgoings
Go through your expenditure with a fine tooth comb. Not just the month ahead, but this financial year. Cancel all unnecessary direct debits or subscriptions. If you have paid for a year upfront, ask to cancel and for a rebate if possible. Small sums of cash coming back into your account all help.
In addition – apply for a rate holiday, ask your landlord to reduce rent and if needs be, defer your HMRC payments such as VAT. You want to shelter cash in your account to ensure you stay solvent. But do remember that these will still need to be paid at a later date if you do need to defer them.
Also, see if you can find cheaper suppliers for power, credit systems, broadband etc.
Work out what you must pay
Certain costs will have to be met.
If you are buying from small suppliers try to meet some of their invoices. Negotiate longer or deferred payment terms with bigger companies. They will not want you to go bust as they will need clients when the new normal falls into place. They are also more likely to have business interruption insurance.
I would also prioritise insurance premiums and other costs like this that offer you cover.
What is crucial is to talk to all of your suppliers about your plans. See if you can come to an accommodation that meets both your needs in the middle.
Apply for a small business loan
The Government is backing the Coronavirus Business Interruption Loan Scheme accessible through participating banks and other lenders. You need to apply for this with a lender as you would any other normal loan – with a proper plan – but the Government will be paying your interest for the first 12 months and will guarantee 80% per cent of the money borrowed. If you feel it is suitable, check out CBILS. Don’t forget that you will still have to pay the loan back in its entirety later on, but it may tide you over a cashflow interruption.
Erica Wolfe-Murray is a leading business expert, coach and author of Simple Tips Smart Ideas.