Right now, with business starting up again, there are a number of things you should be considering as a retailer. Michael Cahill of Albert Goodman lists out the key areas for attention
1. Health and safety
The wellbeing of your staff and customers will be of paramount importance and when you are allowed to open again, it is likely that certain elements will need to look very different to how they did pre-lockdown.
Business owners should undertake a risk assessment and start to complete any necessary requirements coming out of that so that they are able to be up and running quickly.
You may need to change the layout of your premises to enable social distancing, install a one way system on your premises and think about your method of taking payment for example.
2. Cash flow forecasts
Prepare a cash flow forecast. I’d suggest a rolling 13-week cashflow would be sensible at the moment, as well as looking at the position over the next 12 months.
For many businesses, managing their cash as they come out of the lockdown will be tougher than going into it. A forecast will give visibility of any points where the business may have insufficient cash available and give the business owner some time
to take action in order to overcome this problem.
3. Need cash but don’t want to borrow from the bank
The government has provided significant levels of support to businesses in the UK – make sure you have reviewed all of these and accessed what you can.
•Grants for some businesses through the Small Business Grant Fund and Retail, Leisure and Hospitality Grant Fund and Local Authority Discretionary Grant Funds.
•The Job Retention Scheme has allowed businesses to furlough their employees and access funding of up to 80% of the employees wages subject to a cap of £2,500 per month.
•For the self employed, support has been made available through the Self Employed Income Support Scheme (SEISS)
•Deferral of VAT payments due for payments due between 1 April – 30 June (although the deferred amount does need to be paid in full by 31 March 2021)
•Deferral of self assessment tax payments on account due by 31 July (the deferred amount must be paid by 31 January)
•The ability for business to reclaim up to two weeks of Statutory Sick Pay related to Coronavirus for each affected employee
You can also consider what other payments can be deferred – these might include PAYE/NI or corporation tax where a Time To Pay arrangement is agreed with HMRC, a rent deferral /temporary reduction with your landlord’s consent, business rates, and discussing with existing lenders a temporary freeze on repayments.
It is important to remember however that any amounts deferred will ultimately have to be paid at a future point if the business is to survive.
4. Schemes available if you need to borrow funds
Bounce Bank Loans (BBL) Where any borrowing requirement is less than £50,000 (capped at 25% of turnover) Bounce Back Loans are a great option where the eligibility criteria is met.
These can be applied for online, the loan will be over a six-year term, interest is fixed at 2.5%, there are no arrangement fees, no interest in the first year, and no repayments due in Year.
Coronavirus Business Interruption Loan Scheme (CBILS) If you need to borrow more than £50,000, CBILS are an alternative option. The application process will be more involved, but similar to BBLs, there are no arrangement fees or interest in year one. Loans can be repaid over a term up to six years, and lenders will usually offer an initial repayment holiday period.
The interest rate depends on the lender and the borrower’s position, but most rates I have seen have been between 1.5% and 4%. Loans can be from £50,000 up to £5m.
Importantly, for loans under £250,000 the lender cannot seek a Personal Guarantee.
5. Flexible Furlough – how it is going to work
Increased flexibility was brought into the Job Retention Scheme from 1 July to allow employees to work part time and enable the employer to reclaim part of their wages when furloughed.
The calculations can get very complicated and further guidance is currently being sought from Government for clarification but the key principles are:
•From 1 July: An employer can reclaim up to 80% of employees’ wages for the periods they are furloughed, together with the employer’s National Insurance and employer pension contributions
•From 1 August: An employer can reclaim up to 80% of employees’ wages for the periods they are furloughed but the employer will not be able to recover the employer’s National Insurance and employer pension contributions
•From 1 September: An employer can reclaim up to 70% of employees’ wages for the periods they are furloughed and will not be able to recover the employer’s National Insurance and employer pension contributions
•From 1 October: An employer can reclaim up to 60% of employees’ wages for the periods they are furloughed and will not be able to recover the employer’s National Insurance and employer pension contributions
The job retention scheme will then end on 31 October 2020.
6. Review all areas of your business
Use this time to review everything that you do to enable you to return from this stronger.
Do you need to strengthen your online presence or improve your marketing material? Do you need to change your range of products and services? Do you need to diversify risk by entering new markets or geographical areas? How can you improve your customer experience? Are there any overhead savings that you can achieve?
The list is endless but use this time wisely.
7. Plan for a second wave
There is a widespread expectation that there will be a second wave of the Coronavirus at some point. Whilst the timing and severity of this is unknown, should it happen, it could bring with it the tightening of previously relaxed lockdown restrictions.
Planning now for how you would deal with it will make it easier to respond should it happen in due course.
8. Further support
Visit our Coronavirus information portal at https://albertgoodman.co.uk/ where you can book a support call. You can also book on to one of our upcoming webinars or watch previously-recorded webinars
Email your business finance questions to firstname.lastname@example.org for inclusion in the first available issue of Wedding Trader.
If you’d like to consult directly with Michael Cahill for professional advice, then email michael.cahill@albertgoodman.