Upcoming winter months can be scary and full of uncertainty for UK small businesses. Covid-19 pandemic has changed the way we run businesses so it is incredibly important to create an action plan we can act on during the upcoming Christmas and holiday season. In this blog post, I will give you 10 recommendations for your business to survive through winter.
- Benefit from Government Support Schemes
It has been a busy couple of months at OnPoint Accounting with the government introducing a Job Support Scheme and then eventually replacing it with the extension of Coronavirus Job Retention Scheme up until the end of March 2021. Myself and my team have regularly been in touch with our clients to discuss how they can support themselves financially. Most of our clients have now received and used their Bounce Back Loans or Coronavirus Business Interruption Loans and are in need of different ways to support their businesses. While putting employees on furlough or flexible furlough schemes may be a good option for some business, it is always important to look for new ways to support your business financially.
- Plan your finances
At OnPoint Accounting, we are aiming to train our clients to become self-sufficient and help them create a financial plan for the upcoming winter months which can be very tough otherwise. As small businesses, we can do many things to support ourselves independently but before we start implementing new ideas it is important to look at our budget and income.
We recommend planning your finance not using funds for the premises support (Local Restrictions Support Grant) provided you are eligible for the scheme. For example, around £2000 Local Restrictions Support Grant every four weeks is not much of a help for bigger businesses. Therefore, if businesses manage to create a plan to survive without the government support, it creates a financial cushion. As long as you are regularly monitoring your bank balance you should be able to determine whether you can reduce some expenses and whether you can survive without your current income during the winter months.
- Support local businesses
As part of planning for a tough winter, we should all, as small business owners, be encouraging our family and friends to buy local and buy from small businesses to help them survive a very tough winter as it comes. However, local and government support may not be a sufficient financial help to keep your business fully running. Ultimately, there’s going to be some really tough choices coming up in the form of potentially making people redundant or reducing hours. We’ve been working with a client recently who is having to make those tough choices, and what we’ve found is it’s really important that you get the right advice from professionals, even if it’s a case of just calling somewhere like the FSB Helpline and using their document templates.
- Talk to a professional about potential redundancies and reduced working hours of your staff
When you are looking at reducing working hours for your staff, laying team members off or making redundancies, there is a very strict process to follow. In order to protect your reputation and your business financially, you need to make sure that you get the right advice and follow certain guidelines. We understand that it may not be a nice experience for you and your team, but those decisions sometimes have to be made and considered in your cash flow plans to help business survive.
- Consider collaborations as a new way to generate income
Firstly, you need to determine whether your current income will be enough to keep the business running. At OnPoint Accounting, we recommend that you regularly look at new ways to generate income. If you have pivoted back in March when this all started properly happening, you may ask yourself whether there is another pivot you could make. Is there something else that you could do for the winter? Could you do what you’re doing now that you’ve pivoted and make it themed? Are there any collaborations you could do? For example, if you’re running a butcher shop, do you know a fruit and veggies shop locally, a green grocer? Do you know a drink shop locally that you could collaborate with together to come up with a delivery service for Christmas hampers or winter hampers?
Collaborations are proving very popular at the moment, and with the right approach, you can achieve that extra income you need to survive during winter months. If you trust and support businesses you work with, you will be able to access everyone in that collaboration’s circle customer list that you may not have access to normally. Collaboration is a great way to pivot your business, especially if you’re selling essential products. But even if you’re not offering essential products, there is always an opportunity to collaborate with other businesses and create something special. For example, if you bake high-end Christmas cakes, you can collaborate with a business that sells high-end bubbly and you can both create hampers together. Collaborations will not only allow you to increase your sales but also offer better value to both your current customers and new customers which will in turn get you some repeat business in the future.
- Create additional products for Christmas
You could team up with a butcher, a green grocer, a drinks wholesaler or a baker and you could get a really nice locally made Christmas hamper put together to be delivered near Christmas. You can also consider creating special winter hampers. Talk to your local greengrocer, butcher and baker, so you can put together a weekly food box that can be delivered or picked up from one of your stores. It could have everything in there you’re going to need for a week to make soups, your Sunday roast and more.
- Introduce your services to local communities
Pivoting, finding new services, new ways, new things to sell is great, but I feel a lot of people have already done that. So I think the next option is to look at collaboration and working together with your local communities. The Covid-19 crisis has brought a lot of people in the community together, and that’s fantastic. What would be even better to see is if it can bring together a lot of businesses to start working together. I’ve seen a lot of collaborations especially in smaller towns. Businesses are having such a positive experience collaborating with others and that is because everyone wins from it. The customers win, the small businesses win and the sales go up. Pivoting and collaboration within your local community can be a great way to increase your sales. Once you do that, you can plan whether the extra income will be sufficient to be able to survive without having to use your savings. If you’ve still got your bounce-back loan, you may be able to get that last until next year now.
- Start reviewing your business on a weekly basis
We’ve recently spoken to a client who has enough money in their bank account. If they closed their business this weekend and completely hibernated until April, they would survive. However, they don’t want to do that because it would mean losing staff jobs. So we have recommended them to review their business on a weekly basis. We know at the end of each week how much money needs to be in the business to hibernate until the 1st of April. So we’re going to keep an eye on that every week, and if at any point, the sales aren’t justifying operating, then we’re going to have to make some further decisions. We are literally taking it week by week, so their business can survive and hopefully come out of it next spring in a stronger position.
- Calculate your fixed costs
What are the key things to look for if you want to start doing a weekly check? At OnPoint Accounting, we recommend looking at the fixed costs first. These are the costs that are going to occur whether you are open or closed, things like rent, gas and electricity. Even though you’re not open, you’re still going to have some background usage there. Also, costs like staff wages (even if it’s just yourself), insurance and website hosting will regularly occur even if your business is closed. It is important to consider what things you can take away from your running costs. For example, if you own a restaurant, you can take away your food and drink purchases because you’re not selling any, so you don’t need to buy any. If you’re hibernating, you might not need as big of a budget for advertising or staffing. It is important to work out what costs would you have to pay for the next few months, if your business closes today. Once you’ve done that, just review it every week, because next week you might have already paid this month’s rent. So actually you don’t need that in the bank again now for the next three weeks. If you’re reviewing those costs every week, then you can work out at how much you need in the bank at that point to go into hibernation and survive. If you’ve got more in the bank than that, fantastic, maybe you can carry on for another week. If you’ve only got slightly less, then maybe you can make up for it in the next week with a bit of a push. If you’ve got dramatically less, then you need to start thinking, right, I need to potentially go into hibernation.
- Consider putting your business into hibernation
We saw lots of big hotels go into hibernation really early on back in April and May. Small businesses partially adapted, some survived, some pivoted, some collaborated and now hoping for the winter season to be good.
I know businesses in Edinburgh that are really worried about winter right now because they lost the Fringe Festival or Christmas Festival, which is a huge revenue maker for them. Both festivals are huge tourist attractions that bring extra income to thousands of businesses. As a result, small Scottish businesses have to consider hibernation or what’s the minimum they can get away with trading to survive. As a business owner, if you can meet the minimum and you do better than that, that is fantastic.
To sum up, there are many ways that will help your business survive through upcoming winter months. While as a business owner you can benefit from Government Support Schemes, it is important to plan your finances. If you do need to lay staff off or make redundancies, speak to a professional accountant or talk to us at OnPoint Accounting. During this time, try and support your local small business and introduce your services to local communities. There may be plenty of opportunities for collaboration and new projects which will generate extra income for you and other businesses you collaborate with. Christmas is a great time to introduce new seasonal products to your customers. Another recommendation is to review your business on a weekly basis and make sure you are aware of all of your fixed costs. If your costs are too high to keep the business running you may consider putting your business into hibernation. I hope you found these small business support tips helpful – feel free to message us any time if you have any further questions.