Futureproof your business for 2021
Given the unprecedented challenges all businesses have faced over the last six months, there is no doubt that 2021 is going to be an important year. Add to this the UK leaving the EU on the 31st December and the uncertainty of more lockdowns and for many businesses 2021 could be a make or break year.
One benefit of lockdown is that it does present the perfect opportunity for business owners to “work on” as well as “working in” in their business, undertake some corporate housekeeping and take stock of their business and plan for how it will need to operate in a post Covid-19 economy.
None of us know what is truly around the corner for the economy and the impact leaving the EU will have on businesses but what we can control is how well prepared we are for the future.
The commercial team at Mogers Drewett have been working alongside business owners over the last six months to help them prepare for the opportunities that will undoubtedly be available to those ready to seize them. In this article they discuss some key areas that businesses should be focusing on.
The Coronavirus Job Retention Scheme (CJRS) – better known as the furlough scheme – has been extended until the end of March 2021 after which the new Job Support Scheme (JSS) will come into effect.
In addition to the JSS there is the Job Bonus Scheme, The Kickstart Scheme and incentives for employers taking on apprentices and it is essential that employers look to the future and consider all the options available to them to support their businesses when furlough ends to avoid redundancies.
For some employees working from home has worked well resulting in increased productivity and a better life work balance. Employers may therefore want to consider putting place new flexible working policies that offer remote working as an alternative to, or in parallel with, a return to the workplace.
There are many benefits of reviewing and updating existing work practises from improved productivity, reduced costs associated with office working, promoting a better work/life balance for employees and ultimately staff retention.
With so many people working productively from home many businesses could take the opportunity to close offices or downsize. The timescale involved in a business being able to remove or reduce office space will depend on the terms of the existing lease of course but this is an option worth considering for businesses needing to reduce overheads.
We have seen many businesses diversify and adapt their business model in order to maintain an income and not waste stock, over recent months. Many of these changes such as moving operations online are likely to require an update to your terms and conditions to ensure you comply with distance selling and data protection regulations.
Undertake some corporate housekeeping
While we hope that a vaccine will prevent further lockdowns, preparing for one or any other future business interruption is essential. If your existing terms and conditions do not currently contain a detailed ‘force majeure’ or material change clause then it would be wise to include one.
It is also a good time to check your insurance policies and in particular the business interruption cover that has seen many companies not being able to claim on policies where they thought they had cover.
Whilst your standard refund and cancellation terms may give you the right to retain deposits and/or your customers the right to cancel, it is worth considering other options such as postponement or amendment that are likely to benefit both parties moving forward.
Covid-19 has forced us all to look at how cost effective and profitable our businesses are and restructuring can be a good way to streamline and reduce costs. Other benefits include ring-fencing assets from what may be riskier elements of a business or consolidating debts to free up cash where is it most needed.
Reviewing your current operation is not only useful to identify an underperforming area which could then be dealt with but also to establish a focus on a core offering in the future.
With careful planning and appropriate professional advice reorganisations including demergers or use of holding companies can be used successfully to split parts of a business in a manner that ensure there are no adverse tax implications.
Build a cash reserve
A lockdown can have an instant impact on a firm’s ability to undertake work, to invoice and collect cash. It may not need a full lockdown for this impact to be felt with the economic future uncertain.
Establish what your typical monthly outgoings are (rent, staffing costs, insurance etc.) and aim to build a cash balance that you feel comfortable with, to serve as a safety net if your income fell off a cliff overnight.
Difficult though this may be to achieve, and with interest rates at an all-time low and possibly even heading into negative rates, once in place, it will give reassurance.
If you are thinking about making changes to your business and would benefit from some advice please contact our Commercial team on 01225 750000 or email email@example.com or firstname.lastname@example.org we are here to help you get your business ready for 2021.