John Clarke, partner specialising in small and medium size business and corporate recovery at Wright, Johnston & Mackenzie LLP, discusses ways businesses can recover, resume trade and remain resilient in a post-lockdown world.
Has there been an increase in businesses getting in touch in recent weeks because they are struggling or worried and in need of advice?
There has been an increase in businesses seeking help as a result of COVID-19. However, perhaps not surprisingly, businesses can initially be reluctant to reach out, as doing so is an admission that their company is in difficulty. It’s not an easy admission to make. But our experience during lockdown has shown us the sooner businesses seek advice, the greater the chance that their problems can be fixed. This is an extraordinary situation and a lot of companies are facing similar struggles right now. So don’t be embarrassed to admit that your business is facing difficulties and that you need help if that’s the case.
What steps can businesses take to assess whether or not a restart or continuance of trade is financially viable?
First, start by asking the simple question – can your entire business survive the impact of lockdown and if not, can part of it survive? That’s where advice from accountants and solicitors will come in especially helpful. Now is a good time to take forward the parts of your business that are working and cut out aspects that aren’t profitable. When doing this, you need to consider a number of things – are the changes you are making viable? Do you have the resources to run this service going forward? Will a change of course cause issues with employees? Are your customers going to follow you? Be brutally honest – what is the minimum your business can survive on? It’s a difficult process, but you must consider the most cost-effective options.
If survival is possible, how can companies plan for resumption of trade in a post-lockdown society?
Lockdown will ease, but social distancing measures are set to remain in place for some time. Therefore, businesses will have to equip themselves to be functional within the ‘new normal’. Looking to the future, the number one thing is to be realistic. For example, if you run a bar which could previously hold sixty people, but with social distancing in place can only hold twelve, it raises questions around financial viability. It will be a long time before we’ll see ‘business as usual’ so a rule of thumb is to hope for the best but prepare for the worst. Work out what personnel you need going forward and have a survival plan in place which doesn’t leave you vulnerable to employment claims. The nature of the current situation – many workers on furlough and companies facing great financial uncertainty – could lead to an increase in claims in the future so if in doubt seek legal advice. Be prepared by having a robust redundancy process in place which will protect you and your business..
Moving forward, how can businesses ensure that their brand remains resilient?
There are lessons from this unprecedented time which can be taken forward and used to strengthen your business. Owners can be very emotionally attached to their company, so it’s vital to have the right team in place to advise you from an objective viewpoint.
At WJM, we are fortunate to have experts across a range of sectors and can quickly assemble a team who are able to advise on a diverse range of matters – whether it be employment, contracts or family business. WJM recently unveiled a refreshed brand identity and values that underline our commitment to delivering a quality service for clients in the face of the current pandemic. We want to remind businesses across the country that, as they prepare their recovery strategies, our experts are here for them.