Uncertainty has dominated the UK business environment ever since the COVID-19 pandemic struck in 2020. Many businesses have closed while others have quickly pivoted to online trading in order to withstand the crisis. On the other hand, in sectors such as online education and technology, numerous businesses have thrived over the past year or so.
While we are now entering a period of recovery, a sense of uncertainty remains – although it is tempered with a growing sense of optimism. So, what should be the key considerations for SME business owners in this new environment?
- Cash is king. It might be a cliché, but it’s true. In an uncertain environment, cash provides certainty that your business has sufficient funds to survive the next few months at least. A company with strong cash reserves is not only able to weather any storms that may arise, it is also well positioned to take advantages of opportunities, such as the chance to buy out a failing competitor.
- Build resilience. Resilience is crucial to enabling businesses to withstand uncertainty. You can improve the resilience of your business by undertaking an analysis of its strengths and weaknesses, as well as the opportunities and threats that it faces, and acting on the findings. This might mean dropping unprofitable product ranges or launching new services. A management accountant can help you to undertake the appropriate analysis. They can also help you to better understand your balance sheet so that you can improve profit margins.
- Undertake a strategic review. Use this period as a time to reassess your personal, business and financial goals, and adjust your strategies accordingly. For example, you might want to invest in new technology solutions to drive the growth of the business or start succession planning so that you can achieve an early retirement. There may be opportunities to invest in property – particularly with regard to changing the use of buildings that were previously commercial.
- Be realistic about the prospects of your business. A professional adviser can help with this since their perspective will not be coloured by emotion. It may be that you are being overly optimistic about your business’s financial position and they will encourage you to face up to reality. On the other hand, if you think the situation looks bleak, they may suggest reasons why things are not as bad as they seem.
- Seek professional advice if your business is in trouble. If your business is struggling – perhaps because its revenue has dried up or it’s burdened with heavy debts – it’s better to take action sooner rather than later. Speak to your accountant or lawyer. They could then advise you to contact a licensed insolvency practitioner. By taking good-quality advice at an early stage, you may be able to limit the long-term financial fall-out if the business has to close.
- Get your message out there. Businesses can use lots of different channels, including social media, to market what they do. Focus on being really good at marketing your business using one channel – and don’t be shy about it.
The next few months will be a period of uncertainty, for sure, but they will also be a period of realignment – and many positive developments will come out of this time. My overarching advice for business owners is this: Keep your nerve, take good advice from a management accountant and other professional advisers, and be just a little bit cautious. And while you’re being cautious, also be ready to grab opportunities. A period of disruption is typically a time when opportunities emerge.
Mark Allen, FCMA, CGMA
Member in Practice