What is the outlook be for your business post September 2021 when its time to start paying back your government loans?
The government announced that the UK economy is officially opening again, with most restrictions which were in place being lifted.
Some businesses are excited about this as it means that they can now focus on getting their business back on tract. However, the ending of restrictions also means the ending of support. So, does the uncertainty continue ?
How are you going to deal with the next few months?
It is very important that you keep a close eye on your numbers and carry out daily and weekly reviews of the income and expenses in your business.
Psychologically Summer for most people means switching off BUT really you should be focussing on the next few months so that you know what to expect going forward.
Where is your business heading? What does your real cost base look like, without the support? Do you need to be making any decisions now, so you can take appropriate action in an emergency?
Furlough support via the Coronavirus Job Retention Scheme (CJRS) ended in September 2021 BUT the government’s Recovery Loan Scheme is still open and will be until the end of 31 December 2021.
So, now’s the time to establish whether you need to borrow any money – while that loan avenue is still open to you. Even if you feel you don’t really need it, it might be sensible to think about borrowing a sum anyway, simply because the interest rates are so low. You could borrow the money to fund your growth, even if you don’t technically need it to survive!
Review all the options available Is there any other government support that could potentially benefit your business? There is lots of useful information on the government website here https://www.gov.uk/guidance/recovery-loan-scheme
If you have used the furlough scheme, you will be aware that the support for your employees dropped from 80% to 70% in July 2021. This reduced further to 60% in August 2021, 50% in September – and then it stopped completely from October 2021.
How does that affect your business? Well, firstly as I stated above , carry out a full financial review of your cashflow, budgets and prepare forecasts for the next 3 years if it is possible. Look at how you are going to manage without the government support.
Management information is so important
how do you know where you are now – and what the future looks like if you do not have management information readily available?
Easy to understand management information isn’t something you check at a quick glance of your accounting software system. It takes time and advice from your accountants to prepare and goes far deeper than that. So many factors to take into consideration BUT the focus should be how profitable is your business is weekly, monthly, and annually. Not only that BUT what cashflow is going to look like on a regular basis. Remember, that you have been quite used to having the government support and so the key is HOW will you be replacing that income.
When preparing the numbers consider your cost base, cashflow and the way your business is set up. Each of these considerations will help you get a better feel for where your business is heading – and the decisions you may need to make.
Ask yourself – Do you need to be spending the amounts you are currently spending? Is there anything you can trim from your ongoing expenditure? Working life has changed (and continues to change) for all of us. With so many more people now more used to working from home, do you really need all the office space you have? Could you perhaps share an office with another business?
If you did access furlough support, then then preparing these numbers is very important.
Also think about hybrid working. The Pandemic has taught to people everywhere in the world to work differently. Is there any cost cutting reviews which you can carry out?
If you would like to discuss any aspect of your business with us, then please call us. We will point you in the right direction and provide templates which you can use to prepare various documents for your business including the important financial information.
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