28 August 2020

The value of objective advice on your road to recovery


Expansion & Improvement,

Outsourced Accounting

Running your own business can be a tough job. As an owner-manager, you’re currently facing the uncertainty of the post-lockdown market, changing customer buying habits, the threat of an economic recession and the imminent end of much of the Government’s job retention and business loan schemes – to mention just a few challenges.

So, how do you lighten this load and make recovery easier? James Maxwell explains the benefits of partnering with a trusted adviser, and the value of getting objective advice on your road to recovery.  


The current state of the market

2020 has been a tough year for UK businesses; there’s no denying that. If you’re an owner-manager, there’s likely to be a growing number of concerns on your to-do list as we head towards the final quarter of the year and the challenges of planning for 2021. When I look at how my own clients have dealt with the upheaval of the past six months, it’s a completely mixed bag when it comes to the current health of the average UK business. Across the spectrum we see:

  1. Positive sales – some clients have really profited from COVID-19, mainly those businesses that were already selling their products online, either through their own website or marketplaces like Amazon. Some companies have seen record months, month after month, during the stockpiling days, especially if they were producing essentials like food, toilet roll or face masks etc.
  2. Businesses breaking even – other clients have only just about managed to break even, with their usual sales disappearing as soon as lockdown took hold. It’s only been because of their online sales that they’ve managed to bring in enough revenue to balance things out.
  3. Reliance on debt – finally, there are some businesses that are completely on the floor and are only surviving due to the generous government schemes and loans. These owners are having sleepless nights, worrying about what they are going to do when the government money tap stops and the furlough scheme ends in October.


The need to change and diversify

Weathering the initial storm of lockdown was one challenge, but there are longer-term challenges ahead that will require serious changes for many business owners. We’re seeing entrepreneurs diversifying, just to survive and come out the other side. Businesses are looking at new markets, new products and are offering their services online as well as their goods. This is all geared towards finding new ways to attract customers and generate revenue streams.

While certain industries have been severely affected – hospitality and tourism, for example – some companies in these affected industries are finding ways to prosper. Location is playing a key role in hospitality. Many Brits are looking for new UK holiday destinations instead of going abroad, and businesses that are lucky enough to be in these locations are seeing better results, compared to the same time last year.

However, these hotels and tourist attractions are still playing catch-up after the financial mess of lockdown, and also need to factor in the costs of extra safety gear and personal protection equipment (PPE) for staff. The move to remote working has also had an impact. There are businesses who rely solely on the trade of office workers who have simply disappeared since lockdown.

There are big organisations in central London who haven’t asked their workers to come back to the office yet, and are showing no signs of asking their workers back any time soon. Without this steady trickle of office-worker footfall, there are many boutique sandwich shops, coffee baristas, restaurants and pubs who remain closed – even though they’re allowed to reopen. It’s really down to luck as to whether your industry has seen an upturn or downturn. The key, however, is to react to these opportunities and threats and to do something constructive.  


Reacting to change in a positive way

Many businesses are trading as if everything is normal. That may be due to the fact that we’re no longer seeing the death and infection rates on TV and in the media. But we do have to get back to some form of normality, before the entire economy tanks . As a business owner, it’s about using your common sense, looking for potential opportunities, and taking a sensible approach to safety and finding new customers. In a nutshell, you have to be open to change, and if you get knocked back, you have to get back up and dust yourself off. To make the best of the situation means:

  • Taking responsibility – we all need to do our utmost to make the best of the situation. The Government has provided financial support for the past few months, but we can’t wait for the state to do everything – to get through this, we’re going to need to take responsibility for our businesses, our staff and the future of our companies.
  • Being entrepreneurial – we’re going to need new ideas, new business models and new ways of bringing in customers. If you’re entrepreneurial, and you show some ‘get up and go’, I don’t think anyone will penalise you for that.


Overcoming your current challenges

Your business may be seeing positive sales results and growing at a fantastic rate, or you may be relying on government support and debt to survive. At either end of this spectrum, there are specific challenges you’ll face when it comes to planning your recovery and future success. Let’s take a look at both scenarios, and the potential issues:  

Overtrading due to the rapid growth
  • In order to meet the additional demand, the quality of your products may decline, resulting in complaints and loss of customers.
  • Growth is expensive and you may run out of cash while trying to meet the increased demand from new customers.
  • When you’re busy and time-poor, you may start to neglect what’s going on in the industry and what your competitors are doing.
  • There’s a risk that you outgrow your premises and can’t meet the required output, or there might not be enough space for staff to work efficiently.
  • Being so busy will put additional pressure on your managers, who may react negatively – causing issues with motivation and productivity.
  • Staff morale can easily drop if your employees are being overworked, and they are likely to become less productive as a result;
  • Key staff may leave, taking their valuable knowledge and skills with them. Finding replacements and training them is expensive and also time-consuming.


Cash flow issues as a result of COVID-19
  • Government loan schemes are going to end soon. This adds an element of additional uncertainty around the future path of your business – something that can have a big impact on your mental health and wellbeing as an owner.
  • The end of the furlough scheme in October 2020 means you may have to start thinking about making staff redundancies. Again, the guilt of this action is likely to weigh heavily on owners’ minds and may impact on your own mental health.
  • Slow sales and decreased revenues will lead to a poor cashflow position, so there may not be enough money coming in to cover your costs and keep the business afloat.
  • You may have to put your own money into the business, just to survive. There’s then a risk of losing your own personal wealth, with no guarantee the business will survive.
  • Gearing up. If you do manage to survive, how long will it take you to get back to where the business was pre-COVID-19 and to repay all your loans, etc?
  • The government schemes have delayed the rush of companies going into administration. What happens once the schemes are no more? Can you survive?
  • You may not be meeting your suppliers’ payment terms. What effect does this have on the long term relationship? It’s possible that they may start to prioritise paying customers, which could have implications on the products/services you can deliver.


The value of objective advice

Whether business is booming or in recession, there are hurdles that stand in the way of your company’s long-term recovery. Working with an adviser who’s been down this road, and who knows the right path to take, can have a huge benefit. Partners at Haines Watts run their own businesses. We therefore know exactly what services and expertise you’ll need along your journey.

We’ve built our business model on this basis and have specialists in every aspect of business advice, support and compliance. Wherever you need advice, we have a specialist you can talk to. You should have a relationship with your accountant/advisor where you can run every new idea by them. It’s significantly cheaper to make the right business decisions the first time around. It costs a lot more time and money to put things right the second time around.

Even if your business has an in house FD, no one individual will have the level of specialism of our army of advisors. Whether you have an in-house FD, or are looking for external financial help, we will support you through the business’s direction of travel. We can add value by:

  • Acting as your virtual FD and guiding the financial course of the business.
  • Assisting with unexpected events, such as the pandemic, and finding the right solutions.
  • Benchmarking the business against other companies in the same industry, including your competitors, to aid your strategy.
  • Analysing the financial performance of the business at any time, and helping you understand what the figures mean, what needs to improve and what to prioritise.
  • Suggesting where cost savings can be made and helping you implement them.
  • Communicating complex financial terminology in simple, everyday English.
  • Breaking results down by each revenue stream and explaining them analytically.
  • Introducing you to our other clients, where we believe synergies will be made.
  • Advising and challenging the board/owners, to hold you to account.
  • Planning an exit strategy and helping to groom the business for sale.
  • Using our coaching expertise to upskill your own leadership development.


Talk to us about your road to recovery

Having an outside adviser on your team isn’t just about working with an accountant. We’re there as a sounding board, a confidant and an emotional support. Someone that you can open up to about your stress and mental wellbeing, and who understands the worries you might have about the recovery and long-term prospects of your business.

As an adviser we can take the emotion out of a situation and help you make the best, rational decisions. We’ll show you where the numbers stack up (and where they don’t) and create the future path of your business journey with you, on equal terms.  


Talk to one of our London business advisers about the value of objective advice and let's see how we can help your recovery.