COVID-19 financial support – 7 steps and plans to avoid falling through the cracks
When I wrote our blog about financial support and the 5 barriers to business growth some time ago, I obviously had no idea that the current Global COVID-19 crisis was on the horizon. It takes a brain the size of Bill Gate’s to predict something like that.
If you substitute the word “growth” with the word “survival” in 5 barriers to business growth, never more so than now, the number one barrier is getting the right sort of finance for your business at the right time for your business. The other key thing that dovetails with this is business planning. Many businesses either don’t value it, or don’t think they have the time to execute it.
Dwight D. Eisenhower said that when a crisis happens the first thing to do is “to take all the plans off the top shelf and throw them out the window”
But he also said, “Plans are useless, planning is essential”. At the core of this is that planning is not a one-off static event, it is a state of mind, a process.
Unfortunately, and I am in no way trying to make light of the current Covid-19 situation, the problem many of my contacts have identified, is that they know what they want to do, but they are struggling to work out how to do it.
So, here is a combination of things you can do now, and also something you should do in order to be better equipped to deal with whatever happens in the future.
Firstly, here’s the now.
You will almost certainly have deferred or cancelled whatever costs you can, but make sure you are doing what you can afford to do to be on the front foot coming out of this crisis. So, for those of you in the UK.
7 steps to consider for Covid-19 financial support
HMRC is there to help you and have said that if you are VAT registered you should still file your statutory return but cancel your Direct Debit to them if it is set up, or simply do not pay them.
On the other hand, HMRC have said that they can help you with deferred payments of income tax or corporation tax, but you will need to call them or go onto their online chat to discuss payments. You can go to HMRC website, the HMRC help desk, the HMRC online chat or call them on 0330 200 3600.
The Coronavirus Business Interruption Loan Scheme [CBILS] is not simply one scheme with the same criteria applied by each lender. So for those who may not be eligible or have been rejected, talk to other providers who may have different criteria; for example we have access to a CBILS loan for those wanting to borrow £10-£60k that might be worth looking at.
Most relatively young businesses will not be eligible for the Coronavirus Business Interruption Loan because they do not have a long enough profitable track record but there are existing Government schemes, like the Start-Up Loan scheme, that might work for you. If you have been actively trading for less than 2 years you are quite possibly eligible.
For companies who have borrowed on the Start-Up Loan Scheme already, there is a Second loan programme; because you have already secured a Start Up Loan and are within the first 24 months of trading, you may also be eligible to apply for a second loan should you find yourself in need of additional finance at this time.
The Government Job Retention Scheme portal opened on the 20th April for online applications. Don’t delay, apply now if you have not already done so.
There are also merchant cash advances. Any business that uses a card terminal to take payments from customers might want to look at this. Interest rates are not low but if you need money for a relatively short period it might be an option.
At Smorgasbord we are happy to discuss all of the above, or we can point you towards someone else who can help you.
Planning for the future
This brings me onto the main thing that many companies could do in order to be better equipped for whatever happens in the future; business planning.
In another of my blogs, Business Plans are Useless, Business Planning is Essential I outlined how the business planning process can be done efficiently, can be kept up to date, and different scenarios built around different circumstances. Business planning can be used to help run your business, rather than being seen as a necessary time-consuming evil, only to be addressed when one wants funding of some kind; or in a crisis.
As Kathy Gregory, who works for one of Smorgasbord's partners puts it, “A business owner needs to manage unpredictable events and adapt on the fly as things change. This requires understanding their long-term position and visualising multiple scenarios”
Kathy also talks about a business using its advisors to avoid being blindsided by events. I am not sure any of us, except Bill Gates of course, would have predicted the current scenario but the sentiment is right.
Abraham Lincoln said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe”. Chopping down the tree is the event, sharpening the saw is the thing that enables you to achieve the goal.
Similarly, Business planning is not something easily done in a crisis or in chaos. Business planning is not about just writing a plan, Eisenhower knew that wasn’t worth it. But he also knew that planning was essential. In the modern world you can have it all in this regard. With good process and the right tools, you can pivot your plan in a crisis and output the plan you need to accommodate the scenario you want to communicate now.
There are several business planning tools out there, among them our PLANiT Business Planning Tool. We keep the price of PLANiT as low as we can because our business planning is all about adding value as affordably as we can now in order to work with clients on a long-term basis.
Most of all, whatever you decide to do, while you think about the short term also think about the long term.