Having the right mindset is key to navigating the current crisis. Brian Davidson of Parkhead Investments joined by David Jones and Nick Carr from Deloitte offer some practical guidance:
- Maximise your liquidity. Look through every area of your costs and challenge every single item. Don’t assume there is any such thing as ‘fixed costs’. Consider the government assistance available, in particular the furloughing scheme but be aware that you will have to pay staff first and reclaim the money later and it is likely to be June at the earliest. Businesses can delay VAT payment – but remember to cancel the direct debit - and ask for time to pay other taxes.
- Ask the landlord for a rent holiday. Their reaction may vary according to the circumstances, such as how easy it will be to find another tenant, and your own financial position but the sooner you ask the better. Engage with other creditors. Be bold and ensure you have the facts at your fingertips!
- Plan for different scenarios. Keep detailed short-term cashflow forecasts, including the worst case scenario. This not only helps to keep on top of costs but will put you in the best position to argue your case in conversations with creditors and funders. Keep records to explain the decisions you are making.
- Look at funding options. Draw down on any revolving credit facility, and try to extend existing debt facilities. It is better to have cash available even if you don’t need it right now. If you are struggling to keep afloat, consider taking private equity investment too.
- Communicate with staff. If you are planning to furlough staff, write to all of your employees and tell them what’s happening, notify them you are going to reduce their pay but make it clear that you expect them to go back to full pay after the crisis. Those who invest in their people and lead from front through this crisis will reap the rewards at the end of it.
Watch the video for more detailed advice on how to help your business survive the coronavirus crisis.
Brian has over 25 years' experience in leading companies through successful turnarounds. These roles have included CEO, Chairman, COO and Non-Executive Director of companies such as Crown Paints, Fairline Boats, Alexander Dennis, Plaxton Coachbuilders, Scottish Legal Life and BAE. Brian has worked closely with private equity and banks in these roles, where on several occasions outstanding returns have been achieved against initial operational adversity.
David is a corporate finance advisory partner based in Nottingham and part of the Deloitte Midlands-wide team. David advises owner managed and private equity backed businesses on corporate transactions including buying or selling a business, equity release, development capital fund raising, and management buyouts. David is experienced across a wide range of industry sectors, but has a particular interest in the healthcare, consumer business and TMT sectors.
Nick is a Director in Deloitte's Corporate Finance Advisory practice. Nick has 16 years experience principally advising corporates, owner managers and private equity investors on a wide range of corporate finance activities including acquisitions, fund raisings, MBOs and disposals.