The level of support for British businesses on offer from the Government surprised everyone. As a result, accountants have been inundated with SMEs seeking advice and guidance on whether they’re eligible and how to access the various grants, loans and other schemes.
But it’s not just accountants who have been stepping in to support businesses. There’s a sudden wave of business owners seeking guidance from other business owners. People are more willing, in these difficult times, to share information with competitors or companies outside of their sectors, recognising that we’re all trying to negotiate the same obstacles.
To understand what support British businesses have taken up, how they’ve evolved to cope and what else they feel they need to get their businesses back on track, I Invited a selection of business owners to join me for a frank and open discussion. What do they think the road ahead looks like as they strive towards their new normal?
This article is a summary of the discussion with the key points that we hope will help accounting firms support SMEs beyond financial advice and cashflow forecasting. You can watch the full video below, or read the summary in this blog post.
Who’s on the video?
Chris Gough is the managing director of an IT company in Wiltshire. His business is continuing to trade and hasn’t taken any financial support from the government.
Chris Crook is a multi-unit Subway sandwich shop franchisee who has been running his business for 10 years. He’s had to close down all stores and furlough his team. (He’s also my brother, in case you hadn’t guessed.)
Alex Calcagno has recently set up a recruitment agency. With clients pausing all recruitment, Alex is finding it tough.
Dan Crown runs a mortgage brokerage, has more than 15 years in the trade and also has a portfolio of properties. Has tried to keep the mortgage brokerage going but without the market, it’s been tough.
Early impact of the lockdown
With so much information to take in at the early stages, our SMEs felt overwhelmed. This coupled with initial panic and the fear of the unknown was mentally draining.
Making sound decisions was extremely difficult.
Chris Crook took the decision to close his stores before the government lockdown, putting team safety before the company and profits.
Without government support, Chris found it incredibly stressful. Once support was announced, Chris took advantage of the funding, but it wasn’t without its challenges.
Chris Gough, whose IT company is still trading, spent the majority of the early days supporting other businesses as they moved to remote working overnight. There was a different level and type of stress as workload and customer demand increased.
Challenges with funding
It seems as though some government-backed loans are being paid quicker than others, according to our SMEs. They’re hearing that some banks are making it hard to get the funds needed to keep businesses running.
Personally, they’ve experienced a mixed response from the banks, some getting a speedy response to requests for loans and support, others being made to wait.
The biggest concern for our SMEs who have closed their businesses was getting access to funds before they had to pay bills. They simply just didn’t have the cash to pay wages and other outgoings without money coming in through trading.
Teamwork and motivation
Having the whole of your team furloughed is a new, unique challenge that our business owners are having to grapple with. How do you keep your team motivated when there’s nothing to rally them round?
The usual team meetings to celebrate success or discuss targets and objectives just don’t apply when the business isn’t trading.
For the businesses who are still trading, remote working presents different concerns, around staff morale and mental health. With team members trying to work from kitchen tables and spare bedrooms, manage family life under tension, and still deliver on work.
Chris Gough said his team is pulling together but it’s mentally draining and staff are obviously struggling with the situation we’re all in.
In either situation, communication is key. Being open, honest and transparent is critical to winning the trust of the team. They need leaders to lead, and they are looking to you as the business owner to lead them through this.
Our SMEs agreed that we shouldn’t be so hard on ourselves. We’re doing what we can to get through this and our teams are a source of encouragement and part of the solution, not just a problem to be solved.
Trading at full capacity
When we can all get back to trading as normal is anyone’s guess.
Our SMEs are of the collective opinion that it depends on when the lockdown’s lifted and what’s unlocked. Uncertainty puts a stop to progress but as soon as we know what’s happening, good or bad news, trading can start to ramp back up, in some form.
Dan Crown, owner of a mortgage brokerage, linked it to Brexit. As soon as we all knew what was happening there, companies started spending again.
Network and support
What was clear was how much our SME panel appreciated the support business leaders had received, from accountants, from other companies and from different sectors.
The information sharing and openness of the business community was really appreciated. They had all made new connections and created deeper relationships as a result of all this.
So, something good has come out of a horrific ordeal, and they all wanted to keep some of this spirit alive once we’re out of this pandemic.
They found that accounting firms in particular had unlocked the whole of their company to them, giving them access to advice and guidance that they hadn’t had before.
They recognised this was done partly to build good will and retain them as clients, but also felt it was a sincere attempt to help them navigate the pandemic. They were grateful for the support and took it in the spirit it was intended.
Business change and diversification
Our recent survey of SMEs into the impact Coronavirus has had on businesses found that more than 50% of businesses said there will be a change to their sector and to their business as a result of the pandemic. Some businesses may look to reinvent themselves completely.
Our SME panel discussed the need to diversify their revenue, wondering if they’re too exposed with one business, or a single sector. Should they branch out and invest elsewhere? What opportunities are out there?
They felt they needed support in making these decisions, agreeing it can be lonely being a business owner, especially if you don’t have a management team to bounce ideas off and strategise with.
Looking towards the future, they were all trying to work out how to best pivot their business to meet customer demand and either rebuild their business or find additional ways to bring in revenue.
With the initial panic beginning to ease and business owners having made their decisions around financial support, their attention is naturally turning to the future.
There’s a market for business advice – there always has been. But never more so than in these uncertain times, when companies are forced to look at their businesses in ways they haven’t before, or are seeking out new revenue streams to spread risk.
They need guidance from professionals who they can trust, who understand business and finances, to help them make sound decisions based on data, insight and knowledge.
Accountants are uniquely placed to offer this service. Firms which already offer advisory services will win in this space. Firms who are compliance-focused may struggle to adapt and meet the needs, which will lead business owners to firms who can demonstrate this expertise.
You can read more on what support British Businesses need from accountants in our recent research via the insight section of our website.