Surviving a pandemic

Article by Richard Holden

Lloyds Bank

As the impact of coronavirus is being felt worldwide, you may have concerns about how it could affect you and your finances.  I have outlined some important steps you can take to manage your financial risk exposure during this pandemic.

• Re-evaluate any business forecasts – and adjust them so that you recognise what the overall impact may be.
• Be aware of your cash flow forecasts – fixed costs such as rent and utility bills may remain while income is likely to be impacted, so consider how you tackle these shortfalls.
• Make sure you fully understand any help available and how you access that help.
• Talk to your bank – Explain how your business is being disrupted and seek support.

With the UK Government imposing restrictions on leaving home, banks have kept as many branches open as possible to help with essential banking for those who need us. Some changes have had to be made to available services and opening hours. Due to the challenging times we’re all experiencing, we’re dealing with a much higher number of calls from customers than usual and our call waiting times are much longer. Internet Banking has proven to be the best way to bank for most of us during the Covid-19 outbreak.

If you haven’t benefitted previously from banking securely with Internet Banking the pandemic has demonstrated the importance of being able to access your bank accounts remotely. Managing your direct debits and standing orders, paying bills, viewing transactions and even paying in cheques through our Mobile Banking App, it is an important lifeline to business owners during this time.

This pandemic is unlike anything most of us have experienced before, and it can feel strange, confusing and overwhelming. Many of us have been working from home and others have needed to take time off work due to illness or to look after children. All of which prevent us from having our usual daily interactions. This is bound to have an impact on our mental health.

Health and wellbeing of your network, staff and customers should be your priority both now and moving forward. Ensure that care and support information is as easy as possible for everyone to access. Identifying business critical functions and prioritising support for these is vital, at the same time being mindful of the possible impact on your network and adopting a flexible approach. So what can we do to help ourselves and look after others during this time?

Mental Health UK, has developed some useful tips and ideas to help people look after their mental health in such challenging times. There are simple steps you can take to look after your mental health and wellbeing which could improve your energy, happiness and job satisfaction.

What lessons are there to be learned from the coronavirus outbreak and how it has impacted UK business owners? Firstly, whilst understanding the initial panic due to financial uncertainty, it has been surprising how many franchisees needed to seek urgent additional financial assistance from their lender within days of the outbreak, suggesting in many cases very limited capital reserves to fall back on as a contingency. Too many franchisees sail too close to the wind rather than keeping sufficient reserves for a stormy day.

Awareness and understanding of basic financial tools, that should be used in the day to day management of a business, has proved alarmingly lacking. Many franchisees failed to demonstrate the ability to pull together a rudimentary cashflow forecast or produce up to date profit and loss figures for their business. Several franchisors include some form of financial module in their initial training programme, however Covid-19 has highlighted the need for much greater emphasis on financial management not just during the initial training programme, but for the entire network on an continuing and regular basis.

Numerous franchisees have decided to take advantage of the UK Government schemes to assist them during the pandemic. Coronavirus Business Interruption Loan and Bounce Back Loan options have resulted in increased debt. The Government is covering interest during the first 12 months, however it is prudent to look at repaying back what you can when the financial outlook becomes more stable and before monthly loan repayments eventually commence. The borrower remains fully liable for the outstanding debt.

Other support made available from the Government during coronavirus includes; Statutory Sick Pay to encourage people to self-isolate, Coronavirus Job Retention Scheme to cover employee wages, Self-Employed Income Support Scheme, Business Rates Relief, VAT payments deferred, The Future Fund for innovative start-up businesses, Business Interruption Insurance pay outs where cover is in place and Time to Pay on HMRC liabilities. The COVID-19 pandemic is a fast-moving issue, so it’s important to keep up to date with the latest Government advice and support for individuals and businesses and adjust your plans accordingly.

Forward thinking business leaders will have developed a contingency plan covering all types of business disruption to minimise risk. What is possible will depend upon the nature of your business and your level of exposure to disruption. A plan should cover all possible risks including supply chain disruption, reduction in workforce due to illness and school closures and service delivery capability. Consult regularly with your network and staff so you fully understand what they are seeing ‘on the ground’ and what impacts they are anticipating. Ensure that you don’t get caught out next time by planning ahead and learn the lessons from Covid-19.