How can businesses recover post-pandemic?

Author
Simeon de la Torre
Owner & Creative Director | SIM7 (Creative Agency)
16th June 2021
Member roleChamber member

With a further delay to full-scale opening and uncertainty about exactly what comes next, SIM7, Bristol creative agency and long-time BW member, spoke to two clients, both growth specialist accountants, to find out more about what’s happening on the ground. What is the outlook for businesses, and what they should be doing now to make sure they emerge from this current situation in a great position? 

The here and now

“The biggest problem is uncertainty,” believes Della Hudson, business consultant and founder of Minerva Accountants.

“Business owners are trying to plan without a clear idea of exactly the problem they’re facing. Furlough is unlikely to be extended after September, so the need to contribute more to the wages bill will be a challenge for some and should be factored into current thinking.”

Despite this, Natalie Binstead, founder of BW Business Accountants & Advisers believes that in general business confidence is high:

“Although it depends on the sector,” she points out. “Hospitality is struggling, but most clients I speak to are doing relatively well. I’ve heard amazing stories of triumph: a coffee shop turned grocery store doing better than previously thanks to pivoting their business at the right time. And I’ve seen exciting new businesses popping up as people decide to go their own way.”

Where should the focus be right now?

As Hudson points out, “Cashflow will be key in the coming months. Bounce Back Loans, secured in the early days of the pandemic, will reach the end of their interest free period. And you should speak to your accountant to make sure you’re not going to get any nasty surprises, particularly if you’ve had less work and would normally expect to benefit from tax deductions such as those applicable to the construction industry.

“If you’ve been limping along waiting for the market to open up it’s crucial that you make a plan. It may be hard to predict the changes coming your way, but my advice is to forecast as well as you can, make assumptions and come up with back up plans for if, for example, more delays occur. It’s not too late to pivot your business if you feel it could benefit you. Do your research and the new direction could even end up being better than your original offering.”

Binstead agrees that forecasting should be the focus:

“With furlough coming to an end it’s vital to work out what’s next. Particularly if that scheme has been propping up your business to some extent. This latest four-week delay will have a massive impact on some businesses, with many having already ordered stock for the period. I advise you to begin making short-term and long-term plans based on the things you know. How much cash do you have coming in and going out? How much do you need? Do you want to offer credit terms to your clients? Aim for a cash rich position. 

“To do this well you’ll need a snapshot of exactly what’s going on, but the good news is there are great apps out there that will integrate with your accounting software. These will enable you to paint a picture of where you are today so you can accurately plan for tomorrow. And remember your accountant will be happy to help with this exercise.”

The future is bright

While the feeling is generally positive about the economy, there are a few things to be wary of. 

“We expect lots of tax changes over the next couple of years,” explains Binstead, “including a rumoured Capital Gains Tax shakeup. These should be factored into your forecasts and any plans you have. Often overlooked too is the capital allowance super deduction announced in the budget allowing companies to claim 130% capital allowances on qualifying plant and machinery investment until March 2023. Can you afford to bring cash expenditures forward? It will be worth it.

“And of course, don’t forget Brexit is still bubbling along in the background bringing with it potential VAT issues through importing and exporting.” 

“On a more positive note,” adds Hudson, “The Bank of England reports that household savings have risen substantially with 28% of households accumulating additional wealth meaning consumers will be ready to spend when things get moving. 

“The sense on the ground is of resilience; those who have been able to trade and have survived this far should be able to ride things out from here. People want everything back to normal. And small businesses will play a huge part in driving that recovery.” 

SIM7 is a creative agency that works with national brands and local start-ups across every sector. For more information, visit their website.

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