This is a tough time for everybody, but for freelancers, sole traders and small business owners it’s particularly hard. The plans businesses might have had for the year ahead have had to rapidly change in the past few weeks. Instead, processes that might have taken months or years to implement have had to take days and weeks.
The UK government is, of course, doing a lot to try and help freelancers, sole traders and SMEs through this difficult time. This is especially important as 99% of businesses in the UK are identified as SMEs and need to find a way to keep the lights on. But with so much information flying around, it can be difficult to find what is needed.
Below are five tips to help manage your finances through this crisis. The piece looks at chasing invoices, moving online, and trying to plan for the businesses’ future, with some added advice from the government.
Managing your finances in these uncertain times
We all find ourselves in a rapidly evolving situation. It is hard for businesses to try to plan for the long term. Rather, each day brings a new twist to a difficult situation. But there is help to be had. The government has put some packages in place to help SMEs get through this period.
● Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
● Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,001 and £51,000
● The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank, which are guaranteed by the Government
● A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
● The HMRC Time To Pay Scheme, which is delaying tax payments
It’s important to check the government’s Covid-19 SME support page to find out how to apply for these various grants and relief packages.
Staying on top of your invoices is going to be crucial. With the uncertainty from COVID-19, cash flow is more important than ever. But with so many suppliers also experiencing sudden shortages of work they might be struggling to pay invoices on time.
If your customers or suppliers are in industries heavily affected by the coronavirus, you should contact them as soon as possible to not only remind them of their outstanding invoices, but to also discuss payment plans and when they would be able to pay. This will help you understand what your incoming finances are going to look like, and how many late payments you need to account for.
Don’t be afraid to remind customers of any upcoming payments. This could be done by:
● Sending an email a week before the invoice is due, and then again 24 hours before. This also gives them a chance to let you know if they are going to miss the payment at all, so you can work on a plan of mitigating those losses
● If you’re using accounting tools, you can set up automatic invoice reminders to send to these customers
Remember though that we are all going through a difficult time and the personal touch can go a long way. If there has been a missed payment, give them a call as soon as possible to see what can be done.
Using the spare time to plan your business’ future
This might seem like an impossible task right now. But there will come a time when we find ourselves on the other side of this crisis and can go back to normal. As you plan for your future, remember there are government schemes in place to help get over this difficult period.
Even in a crisis, ongoing business planning means that you can monitor and adjust your business goals accordingly. This can then be used as a tool to identify where the business is now and what direction you want to take it in; as well as how you get it there.
Try to adapt a continuous and regular business planning cycle that keeps the plan up-to-date. This should include regular business planning meetings which involve key people from the business.
If your business needs short term cash flow support, make sure to look at the government’s Coronavirus Business Interruption Loan to help you in the short-term. IPSE – the association for independent professionals and self employed – also has some great information on how to grow your business.
Moving your business online
When it comes to moving a business online there are some golden rules you need to have in place. Firstly, you need to have an up to date website. Customers want to be able to visit your page and know what you have on offer and what changes they can expect to the regular service.
With that in mind, you also need to develop a plan for maintenance. Prices and descriptions will need to be added and updated, old information removed and new information put in its place. Make sure to set up regular intervals for website checks and maintenance.
Social media is also a great way to get your business online and reach your target audience! But not every platform will be right for your business. A starting point would be to look at what platforms your competitors are on, and how they are marketing to their audience. Make sure to read up about each platform and its capabilities before you spend any money.
Celebrating the small wins
It’s important to always celebrate the small wins. And never more so than during a crisis. As a business, make sure you touch base with your employees, help them to feel secure, and find the small victories in the everyday to celebrate. Though, to make sure that all the small wins can keep on being celebrated, the government has pledged to help employees as much as possible.
There are two schemes that can help here: the Job Retention scheme and Coronavirus Business Interruption Loan. You will need to:
● Designate affected employees as ‘furloughed workers,’ and notify your employees of this change. To be noted that changing the status of employees remains subject to existing employment law and may be subject to negotiation
● Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month
It is not easy to do, but keeping morale up and making sure that all the positive occurrences are applauded can go a long way. But don’t forget about your customers. Many will have had to drastically change their daily routines, and understanding that you are there for them during the crisis can build brand loyalty long after this is over.
This is a tough time for everyone, but there are schemes in place to help SMEs weather the storm. The government backed packages are there to help you, along with handy tips on how to manage your finances and plan for your businesses future growth.
Antti-Jussi Suominen is CEO at Holvi