First it was the “B word” in 2019 and now for 2020 it’s all about the “C word”!

A few months ago, we were adapting to life in phase two of Brexit and wondering what that would look like in the coming twelve months. Well folks, that’s on ice for the moment as the coronavirus hits our shores, but Brexit is still ahead of us sometime. This event has changed the business landscape overnight for at least the next three months or possibly much longer.

For clients in the tourism, leisure and entertainment sectors there has already been major changes immediately threatening their businesses’ existence. There is lots of advice about coronavirus online and daily briefings from the government and others on health, legal or HR matters which we are not going to repeat here. We have had a budget and an emergency funding package already in the last two weeks meaning change is with us.

Unknown unknowns

On reflecting about the uncertainties presented to us we were reminded of Donald Rumsfeld’s quote:

“Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.”

We are not saying these were wise words, but coronavirus certainly seems to gives us lots of unknown unkowns. As business leaders we all need to assess the risks and decide our course of action through the middle of this challenge. This needs some rapid analysis and positive action.

Help yourself then help others

The new policy guidance from the government has been so abrupt that we have had to assess, evaluate and act to change our own business model over a twenty-four-hour window. On 17 March 2020, St Patrick’s day, we pivoted our business model completely from being office based to a remote working business model. Our offices are now closed for meetings, except by special arrangement, for the next twelve weeks. Having used the cloud for ten years and been paperless for five years we have had this business continuity plan in place for a while and tested it a few weeks ago – now its implemented!

Please be assured all our services have continued this week without interruption and we believe that we are exceeding current government guidance. We currently predict no loss of services as a result of the coronavirus and we are now focusing 100% of our efforts on supporting our clients at this challenging time, having already consulted with those most dramatically impacted. We care about our clients and we want to help with any financial distress!

Leadership

While as business leaders we need to take the right actions we also need to lead through this pandemic. Our approach is to be positive, keep calm and moving constructively forward. We were sent a mail about the 5 C’s of crisis business leadership which seemed worth sharing:

  1. Communicate Daily – the number 1 action – maybe even twice per day;
  2. Customer/Community Support – give, give, give with no expectation of return;
  3. Clean Up and Catch Up – time for spring cleaning to keep people proactive and occupied;
  4. Cash, Cash, Cash – engage the entire team to help; and
  5. Calm and Considerate – breathe!!

This is not our list but seemed to cover many of the key points our business has had to consider in adjusting to the environment created by coronavirus. Hopefully they will help others too.

General finance advice

Obviously, we are working with our clients on a case by case basis and advice should be specific, but we thought it was worth noting our five key steps.

  1. Building the war chest Not having profits is tough for a business but not having cash kills it. When uncertainty increases there is a risk that profit margins and cashflows vary. To address this immediate action should be taken to ensure your business goes into this challenging economic time with the largest war chest of funds possible. Remember that this could be debt or equity facilities rather than just cash;
  2. Keeping the business model alive and wellWe have explained that we have this week already changed our business model to attempt to reduce the spread of the coronavirus and increase our resilience to it. An event like this changes markets and creates new norms. We would be surprised if most businesses did not need to review and immediately adapt to maintain their output productivity and their access to revenues;
  3. Turning off the expenditure tapsThe government has announced some support and it is likely this will evolve as we move further into this pandemic. Businesses should however review their expenditure and commitments to reduce leakage and take more credit where possible. Where you have payments coming up…can or should you make them? There may also be other credit or options available;
  4. Set the crystal ball to 3 months and forecast in detailIn normal times we nowadays recommend a 12 month rolling budget within a 5 year rolling business plan for most businesses. These budgets can be iterations based on existing numbers. However, in a crisis situation we recommend cashflow forecasts should be short term and detailed, say 3 months within a 12 month action plan. With such plans the devil is in the detail and that’s the value they add; and
  5. Get support – Such a challenge is when you find out who your trusted advisors really are. We are here to help and I am sure many others will be keen to support you to get through this – Just ask. There is also support from government and lenders, some of which is linked below:
    1. HMRC Tax helpline
    2. Revenue Commissioners advice
    3. NI business support
    4. Irish government advice
    5. UK government advice
    6. UK consumer finance advice
    7. Coronvirus business loan scheme
    8. Irish business supports

Hopefully this note offers some advice and updates but feel free to get in contact with the team at Ross Boyd for more finance, accounting or tax support during these tough times. As a final point we thought we would highlight a prescription from the famous bacteriologist and discoverer of penicillin, Sir Alexander Fleming: “A good gulp of whisky at bedtime – it’s not very scientific, but it helps.”

Good luck and stay safe….

If you need advice just email the Ross Boyd Chartered Accountants team on info@rossboyd.co.uk or call us on 02895 320155.

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