10 Things Businesses Affected by Coronavirus Meltdown Must Do
Strategies to Survive the Coronavirus Crisis
1. Furlough your employees.
If you have no revenue coming in, you can’t possibly afford to pay employees. HMRC have a scheme to cover the pay of any employees up to £2,500 per month. Even if you have cash in your account or borrowing facilities available you should take advantage of this offer. It’s not a loan, it’s a grant so doesn’t have to be repaid.
2. Preserve cash balances.
Nobody knows how long the current crisis will last for. This makes it impossible to plan for the coming weeks and months. You have no cashflow for the immediate future so you must preserve your cash balances. You can’t afford to pay anything until there is clarity about what will happen. You should have almost no outgoing payments until things are clear.
3. Draw down borrowing facilities.
If you have borrowing facilities that are available ‘on demand’ such as an overdraft or revolving credit facility you should draw down the full amount. Do it now. In difficult financial climates credit limits are reduced or withdrawn. There’s no need to take that chance. Draw down 100% of your borrowing facilities now.
4. Don’t Pay VAT or PAYE
HMRC must be more flexible than ever now. Take advantage of it. Don’t make any payments to HMRC for VAT or PAYE for previous months. HMRC have themselves declared that no business needs to pay VAT until at least July. There are no consequences for not paying and preserving cash is more important than anything else.
5. If you’re in some sectors apply for a grant
Grants are available from the government for businesses in the retail, hospitality, leisure or nursery business. These grants vary between £10,000 and £25,000, depending on the rateable value of your business. Take advantage of this even if you don’t immediately need it. It might not be available if you wait. It’s free money that you might need later. Take it now.
6.Take a Rent Holiday
Many large companies have already said that they can’t pay rent in the coming months. You should consider doing the same. There is no chance of eviction in the current climate. Any arrears can be sorted out later when the picture is clear. For now, preserve cash.
7. Don’t pay leases
If you have finance leases on equipment you might want to consider taking a holiday on those payments too. Nobody will be rushing to repossess equipment for the next few months. Take advantage of that to preserve cash.
8. Don’t pay business rates
The government have declared a 12-month business rates holiday for all businesses in the retail, hospitality, leisure or nursery business. Even if you’re not in one of these sectors you shouldn’t pay. It’ll eventually be extended to all affected businesses and there will be no enforcement in any case.
9. Apply for a Guaranteed Loan
It’s worth applying for a government guaranteed loan even if you don’t have an immediate need. None of us know where this is going or how long business will be interrupted for. You can borrow up to £5m, guaranteed by the government. As there’s no interest or fees for the first 12 months there seems little downside in getting one if you qualify.
10. Plan Ahead
This is a good opportunity to make plans. Streamline your business. Acquire a competitor. Plan to clear your debts and get rid of long-term liabilities. Make a fresh start when business gets back to normal.