Stop, Look, Listen
Advice to Directors and Business Owners
By Vernon Dennis, Head of Business Recovery and Reconstruction at Howard Kennedy LLP
Support for business, support for workers. In these strange and unsettling times the Government's direct intervention is essential to save businesses, to save jobs and livelihoods, and arguably it is necessary to ensure the survival of our free market economy.
Governmental measures in the UK and across the globe have seen unprecedented loans and grant to businesses, the guaranteeing of employee wages, the suspension of tax collection and in certain areas measures to prevent creditors taking enforcement action. The speed of development is bewildering and has been described as akin to the nationalisation of the entire economy.
These steps and others may well alleviate an immediate cash flow crisis arising from the collapse of demand and/or inability to trade during the current crisis. However countless businesses face an existential crisis, with no revenue and no ability to predict when the revenue stream return is there any future? What can be done in such circumstances?
- Stop. Take stock; what are the essential component parts to your business. Of course looking at cost and cash flow is key, however in a parallel the question to be asked is what element of the business can be continued effectively, is the business agile enough to quickly adapt to provide a new revenue stream? Already there are examples of hotels being utilised by the NHS for key workers and possibly very shortly to meet patient demands, restaurants offering a take away/delivery service or repurposing as a shop and event/entertainment companies offering hosted online events. Each sector and each business will have a unique opportunity to do things differently.
- Look. As never before look to see what support can be obtained from the Government (grants/guarantees), from Banks (through the Coronavirus Business Interruption Loan scheme); from utility suppliers (British Gas and EDF are announcing measures) and from HMRC (the new time to pay arrangements). The situation is constantly evolving a timely information gathering will be key to survival.
- Listen. To your creditors; what are their challenges? Can the pain be shared? There is also a wealth of great advice being providing by the business support community, both accounting and legal. Listen out for and share this advice. Listen to your competitors. What are their ideas? Normal rules of business engagement are suspended, and greater collaboration and planning across businesses in the same sector actively encouraged; with a potential suspension of competition law in regard to the supermarkets, who need to plan together to ensure that shelves remain stocked and hints of other countless regulatory suspension.
In this climate there is an absolute necessity to share information and good ideas. The normal market rules do not apply, one cannot assume that competitive advantage is best served at this point by keeping the best ideas to oneself. Commercial exploitation of the situation and unchecked Darwinian survival of the fitness will see an economic collapse. We are all in this together; and if help and support is provided across the business community we will endure.
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