The latest insolvency statistics for the first quarter of 2020 don’t tell the whole story

insolvency statistics not the whole storyAstonishingly given the news coverage of a financial fallout due to the Coronavirus pandemic, the latest insolvency statistics for Q1 January to March 2020, show a decrease both when compared to the previous quarter and to the same quarter in 2019.

The figures, published by the Insolvency Service yesterday, showed a total of 3,883 company insolvencies with the majority again being in CVLs (Company Voluntary Liquidations).

This was a decrease of 10% compared with the last quarter of 2019, October to December, and of 6% when compared to January to March quarter of 2019.

Construction continued to have the highest number of insolvencies, followed by the wholesale and retail trade and accommodation and food services.

While these insolvency statistics cover the period before the lockdown due to the Coronavirus pandemic was imposed a drop in insolvencies is still surprising given that economies in the UK and EU had been slowing in previous months.

There is more clarity, however, from the latest Begbies Traynor Red Flag alert figures published on April 17.

They reported their highest-ever numbers of businesses in significant distress at 509,000 with the impact of the lockdown showing 15,000 more businesses in significant distress (3%) compared with Q4 2019. The vast majority of these, they found, were SMEs with under 250 employees.

There is even more concern in the Red Flag figures for businesses in critical distress, which Begbies Traynor regards as a precursor to falling into insolvency. They reported a 10% increase in the last quarter alone, although, as they note, “creditors have been held back from taking court action due to the lockdown”.

The most notable increases, they report, are a 37% increase in bars and restaurants, 21% increase in real estate and property, 11% increase in construction and 8% increase in both general retail and manufacturing.

All this is despite the various financial support measures of grants and loans announced by the Chancellor who has sought to help businesses survive the pandemic.

Having said that, loans need to be repaid and many are concerned about the future prospects for businesses and for some industries that may take some time before they return to normal, not least the Banks who understandably might be reluctant to lend to those who are unlikely to repay their loan. This might explain the numbers of businesses that have been turned down.

In the middle of an unprecedented situation like the current pandemic it is difficult to draw conclusions from trends or make meaningful assumptions about the future number of insolvencies but there is no doubt they will rise significantly.

Historically the rise has been an indicator of the country coming out of a recession although most recessions have been ‘V’ shaped where some are predicting a ‘U’ or even an ‘L’.

Clearly much will depend on for how long the lockdown continues and we should prepare for many companies, particularly those relying on travel, events, hospitality and an already-struggling High Street, to disappear altogether as Warehouse and Oasis have most recently done.

Much will also depend on consumer confidence and spending power – and how many people have lost their jobs but clearly economic and business recovery will be prolonged and painful.

 

Time for a rethink? The global supply chain and short-term thinking

global supply chain rethinkA time of crisis, such as the current Coronavirus pandemic, exposes the weaknesses of inter-dependency and systems and in this case, the global supply chain.

There is perhaps also no better time to review things and perhaps change from the short term thinking that seems to have dominated economics and businesses, especially in those economies like the USA and UK that rely heavily on the purchase of foreign goods.

It is clear that it will be a long time before life returns to normal and it is not yet clear what that “normal” will look like.

In the previous “normal” it was possible to rely on adequate supplies of raw materials for the production of various types of goods, such as food stocks on supermarket shelves.

But one of the first signs of the disruption to come was the rapid emptying of supermarket shelves as people panicked and bought large supplies of various items, for example toilet paper, hand sanitiser and pasta, in anticipation of the coming lockdown.

Another sign of disruption is the price of oil which has plummeted leaving tankers around the world mooring off-shore waiting for prices to rise before offloading their oil.

There has also been the saga of medical equipment such as ventilators to treat those hospitalised seriously affected by the virus and of personal protective equipment (PPE) for medical workers treating them.

Similarly, as various crops were ripening, it became clear that there might not be enough seasonal workers available to pick them, as many farmers had been relying on seasonal workers coming into the country from Eastern Europe.

All these examples provide lessons in the inter dependence of supply chains that support a “just in time” model of global business.

As Larry Elliot wrote in a Guardian opinion piece in mid-April: “The past 30 years have seen global markets – especially global financial markets – increase in both size and scope. Long and complicated supply chains have been constructed: goods moving backwards and forwards across borders in the pursuit of efficiency gains”, meaning that capital flowed in and out of countries equally quickly and there was no thought of building any capital reserves.

In an era of weak growth since the 2008 global financial crisis, he says, “What this amounts to is a world clinging on by its fingertips, even in what passes for the “good times”.

The global supply chain, just in time model effectively did away with large, local warehousing attached to manufacturing units as much as to food stores. It relies heavily on a continuous supply of materials and ingredients being delivered by a well-functioning international and national transport system.

In the UK, particularly, the manufacturing sector has been shrinking for years as the economy has pivoted to rely more heavily on the tech and financial services industries.

The reasons for the decline in manufacturing are myriad but largely down to the long-term investment needed and short-term expectations of investors of a swift return on their investment.

The lack of planning for a rainy day has also been highlighted. This observation is not just of the UK government that has failed to invest in the storage of equipment supplies but it also applies to businesses that have not built up capital reserves and consumers who do not have any savings.

In fairness, it has also brought out the best of those many businesses that have adapted to survive through agility by quickly re-designing their business models and production lines such as those who are now producing hand gel or selling goods outside their shops, restaurants or pubs.

While a short blog cannot hope to analyse all the flaws of a global supply chain model in detail, it has become clear that there are vulnerabilities both to businesses and to national economies that rely on international suppliers and the short term thinking that has driven it.

The return to ‘business as usual’ that is increasingly being demanded may not be possible given how long social distancing may have to continue. How many businesses will cease trading altogether as a result and how many people will lose their jobs will be major factors when we get round to reviewing our trading relationships.

This could therefore be a good time for businesses, economists and politicians to give some thought to creating more robust, longer-term, and perhaps more locally-based systems for the future.

Five top tips for working at home efficiently and maintaining your mental health

remote working and mental health Many companies have adapted to the Coronavirus lockdown measures by asking staff to work remotely from home, but how do you do this efficiently and also protect your mental health?

Much as we love them, a prolonged period stuck in one place with our families can sometimes be stressful, especially if remote workers are combining working with home schooling their children.

Of course, another complication can be the facilities and space available at home, where cramped conditions can add to the stress of trying to work efficiently while staying healthy.

Here are some tips to help you maintain you mental health and efficiency:

  1. Discipline and routine are important: Creating and following a timetable of tasks and activities gives structure to the day, and on that note it is much easier to get into “work” mode if you can work at a desk or table and if you don’t do it in your pyjamas!

Lists are also useful, not least because if you break down your day’s work into tasks and complete them, there is a great deal of satisfaction and a sense of achievement to be gained by ticking items off when completed.

  1. Variety: You should include other activities and what psychologists call micro-lifts into the structure of your timetable. In the normal working day when you are going into work in an office, you may be in the habit of picking up a coffee on the way in, or maybe have a regular break for a few minutes at the coffee machine at work for a chat with friends. Don’t underestimate the importance of giving your brain a few minutes’ rest.

It is also important to take regular breaks from a screen if your work is mostly being done on a computer/laptop.

  1. A healthy diet: It is tempting to snack more when you are working from home, but this may mean that your diet is less healthy and that is not good for either your physical or mental health.  This relates also to the importance of having discipline and a routine that builds meal breaks based on a healthy diet into your timetable.
  2. Exercise and fresh air: These are also important for physical and mental health albeit they are restricted to the social isolation rules that allow for one hour of outdoors exercise per day. You would be likely to get that during a day at the office, by walking from transport to the office building or going out during your lunch hour. If you are working from home and have children with you, involving them is a great way of treating exercise as a family activity while at the same giving children the opportunity to burn off excess energy.
  3. Try to get at least seven hours’ sleep: Sleep is a major component of mental health and of working efficiently especially when in a time of crisis.

The secret of working at home efficiently is in many ways intimately connected with your mental health.

For many people this will be a new way of working and you may find that it takes a good deal of self-discipline and organisation to maintain your productivity, but if you follow the guidelines in this blog you will find that you can settle into a routine that enables you to carry out your work tasks as well as the other demands on your time that come from being in your home with family around you.

Coronavirus Business Interruption survival will need agility not pride

Agility is essential for business survivalArguably, all successful businesses need to exercise agility in a fast-changing world, but never more so than now in the midst of the Coronavirus pandemic.

While there is nothing wrong with having pride in your business, pride is also associated with sticking doggedly to a plan that is not working due to a change of circumstances. Just because you have always done things one way doesn’t mean that way is always right in normal circumstances, let alone in abnormal ones like the current situation. In a crisis everything you do should be challenged and often fundamental change is necessary if a business is to survive.

Business agility is therefore a key attribute for dealing with adverse circumstances, to be creative and adapt to the changing environment. This in particular applies to three main areas: staff, customers and processes.

Social distancing has meant that for some businesses their staff have had to work remotely while others are needed in the office to maintain systems. This has involved setting up new policies to protect staff who need to come into work, while at the same time making it possible for others to work from home and keep in touch. Equipment for remote workers, remote access to central servers, online security, new ways of working together and new forms of communicating have all had to be learnt very quickly. Better this than some companies who simply closed their doors when the big bad wolf began prowling.

There are terrific examples of firms that have adapted by changing their business completely such as restaurants that have switched to offering ready-meals for either collection or delivery, enabling them to keep going after they were forced to close their doors as part of measures to contain the spread of the virus.

Others, among them distilleries, have switched their production lines to manufacture such products as hand sanitisers and engineering firms that now make ventilator equipment for hospitals.

Some clothing manufacturers have switched to producing hospital protective clothing of various types.

A wholesale bakery client has had to replace its traditional hotel and restaurant market and now supplies market stalls, independent retailers and farm shops with its turnover nearly back at pre Coronavirus levels, all in six weeks and very different from their initial assumption that they should cease baking.

Another client, a plant and equipment rental company, now supplies the new Nightingale hospitals when it too had assumed it should close down.

A local pub now sells garden bedding plants from its front gate and has shown far more initiative than the local garden centres that have all closed down.

With consumer behaviour having radically changed as a result of the self-isolation rules, many retailers have massively increased their online presence, although it has to be said that when people are worried about their futures and their finances there will inevitably be a reduction in the purchase of non-essentials even online.

Perhaps the most agile and innovative have been the smaller SMEs, particularly tech support companies and gyms, who have taken their services online, producing regular teaching and remote IT problem solving services to help people. Many have offered a combination of part-free and part paid-for services, which are likely to be remembered by those they have helped once life has returned to normal, however different that “normal” may turn out to be.

As economies move out of the containment phase and some restrictions are loosened or removed altogether, your business will need to remain agile. There is some good advice from Accenture here.

It will not be a case of returning to the status quo-ante and it is too soon to be able to assess how customer and client behaviour will have changed in the medium term, so it may be that your business will have to develop a permanently agile mind-set in order to survive and remain resilient in the face of changes in both consumer behaviour and structural change in industries and the economy.

This may mean changing your business model and plan and paying much more attention to markets and demand.

A prerequisite to surviving a crisis is the ability to overcome the natural feelings that can overtake rational thinking. Emotions such as fear and anxiety relating to the unknown, the unanticipated event, a loss of control and unpredictable outcome are all natural but they need to be suppressed to allow rational behaviour and creativity to emerge as the way of finding solutions and new initiatives for dealing with the new circumstances.

It doesn’t matter that many initiatives won’t work so long as pride doesn’t get in the way and you acknowledge you were wrong and try something different. Paralysis and inaction are the real enemy.

For details and my free guide covering all the government Coronavirus Interruption Support initiatives check out the Online Turnaround Guru website.

While it is fine to have some pride in how you may have steered your business through the early stages of this crisis and survived, it is worth remembering the old saying “pride comes before a fall” so it is worth remembering the lessons we gain from experience. And, while we don’t know what we don’t know, we can always keep looking for answers and keep asking questions.

Get expert help with cash flow management in a crisis

cash flow crisisIn the current pandemic situation, many businesses deemed non-essential have been forced to temporarily close for a lockdown period and it is clear that many SMEs will have serious cash flow problems when they resume trading.

Unfortunately, the cash flow problem won’t go away even though for the moment it is easy to ignore it by holing up at home.

While it is true to say that all businesses should have plans for dealing with emergencies and reserves for cash flow problems, it is unprecedented to have to deal with a period of no income and it is becoming clear that many SMEs – and larger businesses – do not have sufficient cash reserves to survive a lengthy lockdown.

Many are telling me that they paid their staff wages for the first month in anticipation of furlough support arriving in time to fund a second month but they are concerned about the Government’s promised CJRS (Coronavirus Job Retention Scheme) arriving in time to pay April wages. As for paying other liabilities such as rent, finance and fixed overheads many of these are being ignored since most SMEs rely on income to pay bills.

It is easy to be wise after the event but, as I have said in my blogs over many years, it is crucial for a business to pay attention to its cash flow and to build up reserves to cushion it from sudden shocks. And yes, as an aside, I do hate factoring and invoice discounting since these only help fund growth and no business can guarantee growth such that in a decline they often starve a business of cash.

While the current situation is unprecedented and it is no surprise that you as a SME owner may be very frightened, it is unlikely that you are in the best position to think clearly about the steps you need to take if cash is running out.

In March, the website Small Business said¨” many small businesses could be forced to make difficult decisions in the coming weeks. Depending on their financial position, some small businesses could start to experience cash flow difficulties very quickly …”

Among its tips for dealing with cash flow crises it advises that you should prepare a cash flow report before seeking financial help such as a time to pay arrangement.

It is helpful to get expert advice to deal with your situation and in particular helping produce the information needed to raise finance and for negotiating with finance companies, HMRC and other creditors.

Crisis management when a company is in financial difficulties is about quelling the understandable panic so that you can manage cash flow and take a long, hard look at the financial and operating options for survival and ensuring the business is viable. This is why objective expert help is so important.

As I said in my blog in February this year: “The most likely immediate priority in managing a liquidity crisis is reducing costs while maximising income.

“So, the first step in managing cash is to construct a 13-week cash flow forecast to help identify risks and actions that can be taken to reduce them. It should include income from sales and other receipts and outgoings, both to ongoing obligations such as rent wages and finance and to creditors.”

It is easy to say with hindsight that SMEs should have built up cash reserves when times were less challenging but you are where you are and calling on an expert to help you with cash flow management will give you a better insight into how you might be able to keep your business afloat.

You can find out more about the government financial help available in my free downloadable guide.

https://www.onlineturnaroundguru.com/support-for-smes-struggling-to-deal-with-coronavirus-pandemic

 

How to manage an efficient online conference

online conference efficiencyAs we all adjust to the new realities of working remotely while we self-isolate during the Coronavirus pandemic, we still need to maintain contact with staff, clients, suppliers and others where online conference calls and video meetings are proving much better than the phone.

But how do you avoid an online conference descending into anarchy with people talking over each other?

There are some simple rules that are not so different from those we adopt during face-to-face meetings.

One of the meeting platforms that is becoming increasingly popular during the pandemic has been Zoom, but there are plenty of others such as Microsoft Teams, Skype for Business and even WhatsApp. Security is an issue and all are constantly improving their security measures following concerns about uninvited intruders, in particular for Zoom which seems to have become the most popular platform.

It is important that the chair should host (convene) and be familiar with the technology since each platform has tools to manage the meeting. Like all other meetings, they need an agenda and discipline over time keeping so it is best that those invited know in advance what topics are to be discussed and for how long. It also helps to ensure key contributors are prepared with any presentation material they need to share.

Confirmation of availability is no different to face to face meetings such that once the attendees are confirmed a notice of the meeting in the form of a Zoom or other invite, which for most will request confirmation of attendance and automatically update everyone’s calendar. The invite also includes a URL for automating the login to the meeting but it makes sense to practice setting up meetings so you are familiar with the technology and invitation settings such as the need or not for passwords and waiting rooms which are all features set by the host as part of setting up the meeting. Once mastered this is straightforward.

The notice should include an agenda, with notes and login details.

It makes sense that the organiser as host opens the meeting shortly beforehand monitors participants’ arrival in the waiting area so they can approve attendance although for large meetings I would recommend you don’t use the waiting feature since it will distract you.

Participants can normally attend meetings using any device they wish including via landline phones so organisers should specify if video is necessary with the notice. For team meetings and internal ones of fewer that about 40 participants I suggest everyone should be able to see each other as this reinforces involvement.

Everyone speaking over each other is a problem so the chair may need to manage this as a discipline to master. To help their is a Participant feature allowing each Participant to raise an electronic hand which the chair can see in the Participant’s video feed and invite them to speak.

Again, learning to switch your microphone on and off  or in the case of the host, switching off everyone’s microphones centrally is another discipline we need to learn and is particularly useful for those at home with a noisy background or children in the house.

Taking notes is another discipline which can be done traditionally although most platforms offer a record feature and in some cases the host can allow or not Participants to make their own recording. It makes sense to cover this at the beginning of the meeting.

The chair essentially manages the online meeting or conference like they would do normally but everyone is logged in remotely.

While not being in the same room makes it harder to pick up the non-verbal signals that we take for granted in face-to-face meetings, video meetings are much better than phone calls because you do see everyone’s reactions.

In many ways, an online conference or meeting is no different from any formal workplace meeting, but it does highlight the importance of a strong chair and the need for courtesy, which, of course, should be features of all meetings.

 

How will consumer spending change as a result of the Coronavirus pandemic?

consumer spendingConsumer spending has become much more restricted during the Covid-19 pandemic safety measures, but will it lead to a permanent change?

From March 21, all non-essential businesses in the UK were forced to close, from hospitality, restaurants and fashion retail to car dealerships and holiday travel companies.

At the same time, many businesses have had to furlough staff and a substantial number of people have sadly lost their jobs altogether.

Inevitably the reduction in income through furlough and loss of jobs and restrictions on going out due to most of us being confined at home are having a huge impact on consumer spending.

It is no surprise, therefore that in March, demand for new cars from private buyers fell by 40.4%, while fleet registrations dropped by 47.4%.

According to Essential Retail the food retailers have clearly benefited both in-store and online to the point where they have had to limit supplies of some products and sign-ups of new online shoppers, however the picture for non-essential retail spending is significantly different, even for those retailers with considerable online and delivery capabilities. Purchases have plummeted.

It says: “People are scared to spend money that’s not essential,”

But as the situation continues, it argues, there is likely to be a greater need for certain non-essential items. Examples include exercise and hobby equipment, gardening products and home improvement materials.

The question is whether all this will lead to a more permanent change in consumer spending once the crisis is over.

According to Paul Martin, UK head of retail at KPMG, Covid-19 will precipitate a rapid increase in e-commerce activity that may persist long after the event, not that this has happened yet.

No-one knows yet how many of the currently closed SMEs will survive the current limitations and much will depend on whether such consumer and business activity will return to normal once the restrictions are lifted. But those of you that do survive will be well-advised to develop an e-commerce proposition if you don’t already have one. The rapid growth in our use of online conference facilities for video meetings that in the past were physical meetings could be an indicator of one change to our normal behaviour where the number of daily meeting participants using Zoom has risen from 10 million to 200 million in a month.

A major factor is the possibility that unemployment rates may rise substantially which will be down to two factors: staff reduction by surviving businesses; and job losses due to insolvency, both of which are likely if there is a delayed or slow return to normal activity.

Another unknown quantity is whether consumers will be more selective about what they purchase having discovered how much they can do without while they have been forced to stay home.

Once the pandemic is over, it is also likely that environmental concerns will rise up the agenda again, making people more wary of re-joining the previous “throw-away” culture.

It will be a while yet before the situation becomes clearer but it is likely that the current crisis will have a significant impact on both the mechanisms and the volume of consumer spending.

 

 

 

Nurture your key relationships if you want to have a future after current crisis

key relationships are important for business survivalIt may seem premature to talk about what happens when the Coronavirus pandemic is over but SMEs need to think ahead and nurture those key relationships needed to ensure their business has a future.

Many of you have had to temporarily close your business and furlough staff due to Government restrictions introduced to try to slow the spread of the virus and many or you have seen your income plummet or cease altogether, with a devastating impact on your cash flow.

According to behavioural scientists it is natural to behave cautiously, even timidly, in the face of a threat, in direct proportion to its magnitude and to what is known about it. But amid the daily deluge of media updates, it is important to remember that we will tend to exaggerate the risk so the threat looms large in our minds.

So, it is perhaps natural to invoke a so-called “bunker” mentality in which self-protection overrides all else.

But as a business owner, no matter how dire the current situation, it is important you try to maintain a sense of perspective and remind yourselves that eventually some form of “normality” will return at which point you will want to be able to return to business profitability.

An essential element of this is what you do now, and key to it will be your relationship with employees, customers and suppliers.

In previous pandemic-related blogs I have talked about maintaining regular communication with staff, somewhat like the government’s daily briefings from No 10 to keep us all informed. This communication is key whether you have been fortunate enough to be able to carry on with staff working remotely, or whether you have had to take advantage of the Government’s furlough scheme for the time being.

Similarly, it is critical to maintain a level of marketing to stay in contact with customers and clients.  They may not be placing orders now, but staying in close touch with them, demonstrating concern for their interests and wellbeing, and discussing the future will help prepare for it.

In the same way, understanding the changing needs of customers may have helped you pivot, as those like some restaurants who now provide a take-away service and offer meal deliveries. This engagement will ensure your business pick up quickly when restrictions are eased.

Another of the key relationships that you will need to nurture is that with your suppliers. You will need them if you are to remain in business where non-payment during the lock down may have been necessary if you yourself haven’t been paid but ignoring them won’t be easily forgiven.

There is a salutary lesson in the action recently taken by New Look, whose CEO last week wrote to all suppliers suspending payments to suppliers for existing stock “indefinitely, cancelling orders for its Spring and Summer clothing lines and saying it won’t pay costs towards them.

In fairness, the company had been in difficulties as a High Street retailer due to the changing nature of customer shopping habits in the previous two years and had closed many of its branches.

However, the news was devastating to its suppliers who received such a brutal message, one of whom is reported as saying the action would “devastate smaller companies down the supply chain at a time when they need help the most”. There appears to have been no recognition or understanding in the letter that suppliers would be facing cash flow issues of their own.

A little empathy would not have gone amiss when communicating such a non-payment message to suppliers who will need a level of understanding to show how important they really are despite being unable to pay them and especially when wanting to do business with them again in the future.

Perhaps you could engage with them by discussing ways to limit the damage, either by offering staged payments, if you as a business can afford it, or by reassuring existing suppliers that you value them and will continue to work with them as the restrictions ease and life gets back to normal.

No matter how focused you are on your own concerns and worries at the moment, and I am by no means seeking to minimise their significance, you should also remember that if you don’t nurture your key relationships now you could put your eventual business recovery in jeopardy.

Help is available for SMEs dealing with the pandemic at:

https://www.onlineturnaroundguru.com/coronavirus-sme-support

SMEs applying for support under the Coronavirus Business Interruption Loan Scheme should read the small print

read the small print in offered helpGrabbing a lifebelt when you are drowning makes sense, but when that so-called lifebelt is a business loan to survive the Coronavirus pandemic, you need to read the small print before signing on the dotted line.

The various government support schemes for SMEs may have made big headlines, not least their claims about making loans available for SMEs, but the devil is likely to be in the details.

No matter how panic-stricken you might be it is worth making sure you know exactly what you are getting into when applying for a loan under the Coronavirus Business Interruption Loan Scheme (CBILS). The difficulty many businesses are having getting through to someone at the bank is an indication of the problem, albeit it is hardly surprising given that banks have run down their SME support teams over the past twelve years.

Before even contacting a bank the first step is to take a deep breath and ensure you know exactly who to approach and what you can apply for. There are ample details about the process on the British Business Bank website here. However, the reality is that banks are likely to prioritise their own customers and among them, their long term ones.

The next step is to prepare a forecast showing how much is needed, what it will be used for and how a loan will be repaid.

Most banks have now undertaken to not pass on their usual loan application fees to customers because the Government has promised to cover the first 12 months of these and the interest payments.

However, you should be mindful of what happens after that in terms of your liabilities. According to the BBB website: “The lender has the authority to decide whether to offer you finance. If it can do so on normal commercial terms without having to make use of the scheme, it will”. This means you may be offered a loan but not under CBILS.

The Big Four banks have agreed that they will not take a personal guarantee (PG) from directors as security for lending below £250,000. However, this message hasn’t trickled down the chain in all cases such that managers are still demanding them. The other issue is that non CBILS loans may be offered in which cases the bank can request PGs and in some instances may want a charge over your home.

Despite there being 40 lenders listed as offering loans under CBILS, in practice most of them are small regional lenders who will not apply to you although they are worth checking out to see if you meet their criteria.

For years I have cautioned those seeking business finance and have advised directors to be extra careful about guarantees so make sure to read and understand what you are letting yourself in for. Indeed, I would also advocate involving your spouse in the decision if there is the slightest prospect of you losing your home. These loans are often sold by ‘nice’ banks to ‘nasty’ ones.

Surviving this dreadful situation is fraught with complexity. Decisions about staff with scope for furloughing them is one area that is complicated since contracts of employment must be honoured – there is a link for some good advice on all this from Acas.

Decisions about delaying payments to suppliers and other creditors is another huge issue, while it may be expedient, not paying liabilities as and when they fall due means that a company is insolvent.

It may be tedious, but you need to consider the possible consequences of decisions taken in the heat of the moment so you need to approach problems in a calm and rational manner and ideally you should discuss them with turnaround and insolvency professionals who have considerable experience dealing with such crisis situations.

Whatever you do, don’t just focus on the immediate benefits of decisions but consider the second and third order consequences of decisions before acting on them, despite this caution don’t delay action, most of it is common sense.

Check out https://www.onlineturnaroundguru.com/ for more tips on survival

 

Why you shouldn’t suspend your marketing during the Coronavirus pandemic

marketingSMEs have had to close, suspend or reduce their activities due to the Coronavirus pandemic and most are looking for ways to minimise their cash out flow however despite the temptation they should be wary of cutting their marketing budgets.

But if your business disappears from the market and in doing so is no longer top of mind for your customers and clients will you be able to regain your position or will others who continued marketing replace you?

Withdrawing from the market may suggest you have gone out of business, as indeed will be the case for many as a result of the Coronavirus pandemic.

While it is understandable that SMEs in dire financial straits will want to preserve cash by cutting back on expenditure, some newly-published research from Opinium, released on March 26 has found that people do still want to hear from businesses of many kinds.

The research revealed that “a very large majority of people in the UK would like to hear either the same amount, or even more, from brands” across a range of categories including the essentials such as healthcare and pharmaceuticals, supermarkets, food and drink and household goods but also from healthcare to fashion and beauty to entertainment.

Of course, many of you have reacted quickly, communicating your actions and in many cases pivoted your business model as a response to the crisis.

One example is a small bakery that has closed its shop and set up an outside market stall so customers don’t need to go inside and a drive-by collection service for other customers who order by phone and don’t want to get out of their car. Another bakery does deliveries to hospitals and essential worker sites.

There are examples of SMEs in the hospitality and restaurant businesses that have been forced to close their doors to the public and have responded in different ways, in the case of some hotels, by offering accommodation to such people as health care workers or the homeless and restaurants that have quickly established food takeaway and delivery services as well as special deals for key workers such as those in the NHS.

Some in fitness, health and beauty have moved online to offer their services remotely to help people in lockdown stay not only fit and healthy but also to be able to look after their appearance.

Of course, all of these will be remembered positively when the crisis comes to an end and it is likely that their business will recover more quickly that those that shut down. Plus, if your business has a website you need to protect its place in the search engine rankings with regular blog posts and ongoing marketing activity.

Perhaps more surprisingly the research found that many people want “brands to talk about something other than the pandemic”.

“This desire for something different is symptomatic of a consumer who is struggling to find their place in a drastically different world”, it says. So, any marketing that can convey some sense of normality is good for your business.

Opinium also asked people what were their preferred forms of marketing communication and top of the list came TV advertising (31%) and e-mails (40%).

While the desire to cut the marketing budget may be understandable when margins are tight, clearly it is far from the right thing to do if you want your business to return after the crisis.