Many of the COVID restrictions were eased almost a year ago, and business owners in vulnerable sectors: predominantly retailers, leisure and entertainment trades, have had an opportunity to re-establish their business finances. Their hard-won capital may have been all but exhausted by the needs to meet fixed costs when income generation was restricted or eliminated by lock-down directives.
Even with the gradual taming of COVID infection, other factors are now appearing. For example, interrupted supply lines, increasing energy costs and inflation.
In the face of these challenges what can beleaguered business owners do to protect their capital base?
Here’s a few ideas:
- List all of your fixed costs, those that you have to pay even if you have no income coming in and cancel as many as you can that are making no appreciable difference to your business.
- Contact suppliers, landlords, service providers etc., and see if you can renegotiate your terms of trade.
- Reconsider any plans to buy significant capital purchases, plant or new vehicles.
- Reconsider your personal needs. Can you reduce or restructure personal drawings from your business?
- When this work is done rework your business plan for the next year and speak to your bank or other sources to secure any cash required to meet the likely dips in cash resources.
- Importantly, be prepared for continuing dips in demand while politicians sort out their response to the emerging cost of living crisis.
Finally, speak to us. There is no substitute for sharing this planning process with your professional adviser. We know your business. We know how you have burned the midnight oil to develop your business and the problems you have overcome along the way. We can, and we want to help.