As the nights draw in and the days become colder, hibernation can seem like a tempting option! Avoiding writing on this somewhat gloomy topic is also tempting but the reality is, as much as we want to pretend it’s business as usual, it isn’t. So, let’s try and shine a light into the darkness and see if we can pick out a few ideas about how we may endure the winter.
Hibernation is not the answer! Instead of sitting back and waiting for rescue once the storm has hit it is important for small businesses to take immediate action. Early prioritisation can really help, for example, if you are about to make a non-essential purchase that may be stopped in favour of settling key supplier accounts.
Diligently prepare as if you were hibernating. Take stock of your current position and see if you can identify potential problems. Produce a plan of action to keep your business trading and moving towards solving those problems. Also keep an eye on the world outside of your business for trends and resources. In many ways this pandemic has been a catalyst for the inevitable. The demise of the High Street may have fast-forwarded, and the digital revolution has gathered momentum- go with it. Many businesses have realised the value of investment in digitisation for cost savings and innovation and it’s estimated that three years’ worth of digital adoption took place in 2 months from the beginning of the UK lockdown.
Brexit is another feature in the pantheon of challenges we may face this winter. Although research conducted by YouGov last month suggests that small businesses see COVID, rather than Brexit, as their biggest barrier to growth over the next 6 months.
Resilience is as important as growth to any recovery and the SAGE report provides tangible statistics and examples. Resilience isn’t just about weathering the storm it’s about being adaptable. The research reveals that new habits, like remote working, have meant that 36% recognise that saving money is as good as making money. Many businesses are finding new ways to become more cost-effective – a valuable realisation that will pay dividends long after this crisis has passed.
Count Your Pennies
Understand your cash position, and review/produce a cash flow forecast (your accountants may be able to assist if you can’t do this in house). You may be able to approach current suppliers for more credit, access new funding facilities or speed up your credit control debtor collections to improve your working capital position. It is also good to stay aware of the latest support the Government is offering small businesses.
The advice seems almost reminiscent of one of Aesop’s Fables! It’s time to batten down the hatches, get your digital ducks in a row, keep marketing and business development pipelines as active as possible, and maximise liquidity and cash flow now to give your business a fighting chance of surviving winter with COVID-19. Talk to us today about how our invoice finance solutions might help you.