Covid has made things tough for small high street outlets – but here are some top tips to help you survive
Microbusiness owners including retailers, hairdressers and builders fear they have just NINE weeks left before being forced to stop trading – despite lockdown being eased.
A study of 1,000 microbusiness owners – those with less than 10 employees – revealed the pandemic has had a crippling effect on their finances. Three quarters of those polled are unsure how they will continue to keep their business afloat in the coming weeks and months. A lack of customers, cashflow issues and a constant worry that consumer confidence won’t return quickly enough are the main fears held.
Worryingly, 46 per cent of respondents admitted they have already considered permanently closing their doors because of the pandemic’s impact.
Michelle Owens MBE, founder of Small Business Britain who has partnered with Smart Energy GB to provide microbusiness owners with a series of money saying tips, said: “COVID-19 has been hugely challenging for microbusinesses across Great Britain.
“As lockdown eases and firms get back to business, many are weighing up their financial situation and focusing on how to recover and move on. Now is therefore a good time to evaluate your business expenditure and identify new ways to save money.
“Everything from negotiating deals with suppliers, through to reviewing business models and shopping around for deals, should be on the table. Embracing new technologies such as smart meters, which help you identify ways to reduce your energy consumption and therefore save money, is another particularly valuable thing to do at this time.”
The research also revealed more than a third of owners have not paid themselves at all in a bid to cut costs over the last few months – with a further 28 per cent claiming they’ve reduced their pay. One in five have also kept the lights off where possible, and one in six have ensured unused tech is turned off at the socket.
Understandably, decision makers have been keeping a closer eye on their expenditure, with a third now checking their finances daily – compared to just one in five before the pandemic. But how much they spend on energy is the second most common cost that microbusiness owners estimate behind tax.
Although 56 per cent agreed having a better understanding of their energy use would give them greater control over their business expenditure. It also emerged four in 10 microbusiness owners accessed a Government grant in this period, with more than a quarter using the furlough scheme, and one in five applying for a Government loan.
However, 31 per cent had to dip into their personal savings to help keep their business afloat, with nearly a quarter using money from their own current account. And one in six have borrowed money from family or friends.
The study, carried out via OnePoll, also showed more than a quarter have implemented social distancing measures in order to stay open – with one in five increasing online trade, and a similar number working on an appointment-only basis.
MONEY SAVING TIPS FOR MICROBUSINESSES
1. Forecast cash flow. To save money, you first need to know where it’s going and when it’s coming in. Sitting down with a simple spreadsheet to plot different financial scenarios can be just as effective as sophisticated cash flow software.
2. Access financial support. If you do have a shortfall to meet, consider applying for a Bounce Back Loans and Business Interruption Loans. The Government’s new Job Retention Bonus might also help make it more affordable to retain staff. Just remember that any extra debt you take on will need to be paid back.
3. Cut costs. Reshaping a business can mean extra costs, so interrogate all your spending to see if there are new ways to save – even if it’s how much you spend on milk.
4. Shop around. If you have costs coming up for renewal, take the time to search for deals. You may find discounts through business price comparison sites, partners, member bodies, or referral schemes.
5. Save energy, save money. Energy usage is one of the expenses microbusinesses are most likely to estimate. Rather than estimate, you can identify ways to reduce your consumption and therefore save money by getting a smart meter installed. Contact your energy supplier to find out if your microbusiness is eligible for an installation.
6. Negotiate openly. If you are really struggling, don’t suffer in silence. Speak to your accountant, or HMRC, about taking up the current offers to defer tax payments like VAT to aid cashflow.
7. Embrace digital. As well as making your business more efficient, tech can help you to do some things yourself rather than outsourcing them. Use basic free options of websites like Canva to create graphic designs or try out Facebook’s new Shops feature. Check out what support you can access via any existing digital partners such as Google’s SME ad credits or the American Express Shop Small offer.
8. Find support groups. The pandemic has been overwhelming for many businesses, so it’s important to make sure you have the right support. Many business schools offer free support through their networks, particularly those belonging to the Small Business Charter.