A cautionary tale

20th January 2021

Les’s specialist printing company seemed to be sailing through the Coronavirus crisis.

They pivoted as soon as the pandemic hit, offering some PPE items. They had sizeable financial reserves.

Even when the third lockdown was announced, “We were in a good place to weather the storm,” Les told me.

Then, in the first week of January, they were notified that their largest client had gone into a Company Voluntary Arrangement.

They owed the company nearly £60,000 - an enormous hit.

And Les believes it could take up to 3 years to get repaid if he is lucky.

I can only imagine the horror and stress that Les must have gone through, as the future of his company lay in the balance.

Luckily, this story has a happy ending.

Early on in the pandemic, Les had taken out a new bank loan under the Government Coronavirus Business Interruption Loan scheme – to boost his business reserves precisely in case this kind of situation arose.

This remarkable piece of foresight saved his business.

“I have learned that you should never rest on your laurels and get complacent as disaster can just be around the corner,” says Les.

He shared this story with me last week, after I asked my subscribers about the biggest business lesson they’ve learned during Coronavirus.

It’s a lesson we all need to carry forward into 2021, as well.

You see, there has been an enormous focus on the businesses which have struggled and suffered during the pandemic.

But almost unnoticed, there’s also a very large number of companies who have not been affected by this crisis - or who have even thrived.

If yours is among them, you might by now feel immune to the effects of Coronavirus - in the business sense, at least.

As Les’s example shows, you cannot take that for granted.

Even if you’re still thriving, your clients or customers may not be.

The next few months may be brutal economically. Many businesses that just about survived two lockdowns may not survive a third.

As government support for businesses falls away, we’re likely to see a sharp rise in businesses failing and unemployment rising.

And in such tumultuous conditions, there are certain to be enormous amounts of flux and innovation which could upend your industry - whatever it is.

So past resilience does not guarantee that you’ll get through the rest of this pandemic easily.

You need to be prepared for nasty surprises and financial shocks.

That doesn’t necessarily mean you need to rush to take out a precautionary loan like Les did.

But you do need to be extremely familiar with your figures so you understand how big a blow you could withstand…

Think now about the most likely scenarios you might face…

And make sure you have provisional plans in place.

If the worst does happen, you don’t have to work out your first steps under extreme pressure.

Being prepared is the mark of a well-run, grown-up company - as opposed to a fly-by-the-seat-of-your-pants start-up.

You may never have to use those plans, but having them in place is essential insurance that can save your company.

That’s why this kind of assessment and planning is part of our work, when we help our clients professionalise their financial management.

If that’s the kind of level you’d like to be operating at, get in touch or call us on 01279 647 447 to get in touch today.

You cannot afford to be complacent. In 2021, be financially prepared!

Warmly,

Garry

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