The Real Cost of COVID to Small Businesses
It’s time to get back on track with your venture and start making a healthy profit again. There are millions of dedicated owners like yourself in the UK, all of whom are eager to get back to business. We’d like to support as many of these owners as possible by providing guidance on where to find financial support and which scheme is right for you.
One year on – The Cost of COVID
Recent data collected by Simply Business has revealed that the real impact of Covid is set to exceed 126.6 billion, double the figure predicted a year ago.
Due to this, many small businesses have turned to the government for financial support to subsidise them through the crisis. Yet, many believe that the schemes and loans that they’ve been entitled to have been nothing short of adequate so far.
There are also cases of organisations such as insurance companies not delivering on their promises during the restrictions – and still taking your money!
So, now is the opportunity to act and claim this back – keep reading to find out how you can do this…
Other factors leading to financial loses throughout coronavirus
Covid hasn’t been the only pandemic hindering small businesses; cybercrime and online fraud has spread rapidly throughout the last year due to many having to work remotely.
According to the LexisNexis UK Cybercrime Report, there was a 44% rise in bot attacks between July 2020 – December 2020, particularly targeting media organisations and e-commerce.
Cyber-attacks have led to many unprecedented financial costs for small businesses. But these losses are preventable. If your company is set to continue remotely working, investing in a strong cyber security package is vital in protecting your data.
The National Cyber Security Centre has produced a small business guide on cyber security. It provides affordable and practical advice for businesses on topics such as protecting your organisation from malware.
Click on the link to read the full guide: https://www.ncsc.gov.uk/collection/small-business-guide
Cost of materials
According to a Bank of England survey on pay and costs, firms reported that their sales volumes fell by more than their input costs over 2020, such that the cost of producing a unit of output has increased. These higher costs of production have led to several knock-on effects, including increasing prices of materials.
Cost of workforce
Less demand for services and goods, as well as a greater unit cost has left businesses with a much lower income compared to pre-covid. As a result, the costs involved with paying employees has become an issue for many companies.
Keep reading for information on the Coronavirus Job Retention Scheme, which can aid you in financing your workforce.
Now for the good news – there are many ways to rebuild and restart your venture as we look ahead towards a more positive future! This begins with adapting from your COVID experiences over the last year. It also starts by finding where your business can get financial help.
Future-proof your Business
Very few business owners had even contemplated the potential impact of a global pandemic on their business. Many would never have guessed that we’d experience a worldwide shutdown as it’s never happened before now. In turn, this made it less of a consideration for small businesses.
We can’t do anything to prevent disruptions such as coronavirus from happening. However, we can assess the risks they pose to our venture and plan alternative routes in advance.
Businesses must consider:
- Social Impacts
- Economic Impacts
- Political Impacts
- Technological Impacts
Another important consideration to your business is your insurance policy. What does it include and what are you covered against?
Managing your cash flow effectively
Your cashflow funds your business’s operations and covers your short-term costs. By managing your working capital efficiently, you help to make sure that your business maintains adequate cash flow.
This is important as it can determine whether your business is successful or not.
You can manage your cashflow by; only purchasing stock when it’s needed, reducing the period of time it takes for your customers to pay and by increasing the amount of time it takes you to pay your suppliers.
Review your suppliers
Are your current suppliers giving you the best, most cost-effective deal out there? Or are there more financially beneficial chains on the market? Be sure to look around for the best deal for your business; your current suppliers may even give you a better offer in response to you enquiring about other options.
If you would like to find out more about futureproofing your business, please contact your local business doctor here for more information
What Financial Support is Available to Your Business?
“For those businesses which do have an insurance policy that covers pandemics, the Government’s action is sufficient and will allow businesses to make an insurance claim against their policy”
– Rishi Sunak, Chancellor of the Exchequer
Business Interruption Insurance
A good place to start recouping your losses is to check whether your business is entitled to claim on Business Interruption insurance. According to The Financial Times, 370,000 businesses are entitled to claim the insurance. The COVID Claims make it easy and cost-effective for your business to make a claim. They do this by providing businesses with a No Win No Fee service.
How does the process work?
The COVID Claims will examine your Business Insurance Policy and advise whether you are eligible to make a claim.
They will then produce a report which will detail the losses your business has suffered that are claimable from your specific policy and finally submit your claim. What you can claim will depend on the losses your business has suffered and on the limits that your policy applies. The average estimated claim is £160,000, so applying is worth the shot.
To find out whether your business is entitled to make a claim, please visit our COVID Claims page here
Checking to see if your business qualifies to claim on Business Interruption Insurance is a no-brainer. You have nothing to lose under the No Win No Fee so why not apply? It could result in recouping some of your business’s losses and start you on your way towards your business rebuild!
The Recovery Loan Scheme
The government-backed scheme launched on 6 April 2021 and supports access to finance for UK businesses as they recover and grow following the COVID-19 pandemic.
You can borrow between £25,001 and £10 million, from 1 to 6 years.
Is your business eligible?
You can apply for a loan if your business:
- Trades in the UK
- Would be viable were it not for the pandemic
- Has been adversely impacted by the pandemic
- is not in collective insolvency proceedings
Business that received support under the earlier COVID-19 guaranteed loan schemes is still eligible to access finance under this scheme.
The scheme is open until 31 December 2021
Click here to find out how to apply for the Recovery Loan Scheme
Coronavirus Job Retention Scheme
If you cannot maintain your workforce because your business operations have been affected by COVID-19, you can furlough employees and apply for a grant to cover a portion of their usual monthly wage costs.
However, since 1st July 2021, the level of grant will be reduced each month and you will be asked to contribute towards the cost of your furloughed employees’ wages.
TO BE ELIGIBLE FOR THE GRANT, you must continue to pay your furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough.
Click here for more information on the Coronavirus Job Retention Scheme
There are plenty of ways to financially kickstart your business again. It’s just a matter of selecting the most appropriate option for your company and rebuilding from that.
We can help to support your kickstart further. All our Business Doctors carry their own array of experience and knowledge in business regrowth strategy- all of which can aid your restart.
If you would like to speak to your local Business Doctor about restarting and rebuilding your venture, please click here to get in touch