Business Leader recently received some analysis from Lucy Cohen from Mazuma about how SMEs can make the most of the reopening of non-essential shops in the next stage of the Government’s roadmap, while also protecting themselves from potential pitfalls along the way in the next few months.
After a long-awaited four months, today marks the next stage of the Government’s roadmap out of lockdown, and thousands of businesses can open their doors once again. High street sales are expected to jump by nearly 50% today, a fantastic, and much-needed, boost to our economy after such a volatile year.
While today is certainly a cause for celebration, business leaders are approaching this next step with caution. The turbulent nature of the virus means no one truly knows what the future holds, and we can’t assume that this lockdown is the last. Businesses must be prepared to remain agile in this uncertain time. Here are four ways SMEs can protect themselves as the country reopens once more.
Implement a ‘just in time’ ordering system
Due to the last-minute nature of many of the lockdown announcements, we’ve witnessed thousands of litres of beer having to be thrown down drains, hundreds of appointments cancelled, and kilos of food being discarded, all of which have had terrible ramifications on business’ cashflow. While Boris promises that this roadmap is an irreversible way out of COVID-19 restrictions, I advise businesses to heed this statement with caution.
The ‘just in time’ ordering system is an inventory strategy where materials are only ordered and received as they are needed in the production process. This means stock can be purchased and ordered to fulfil exact demand, reducing the risk of surplus materials or products going to waste – a rife issue within hospitality especially. Lower inventory costs per month and less waste means higher profit margins and better cashflow.
Of course, a ‘just in time’ approach has its setbacks. It will limit the number of people you are able to serve per day and issues such as limited stock from suppliers or potential delays in receiving materials may be a cause for concern.
Nevertheless, in a time where the public are relying on good weather to go to the pub and spending will still be kept to a minimum as job uncertainty still lingers, a ‘just in time’ ordering approach will most likely be the most cost-effective choice for SMEs, at least until restrictions are further eased in early May.
Continue exploring a hybrid business model
During the months where the UK was in full lockdown, many businesses, especially eateries, had to come up with innovative ways of working in order to stay afloat. For most, this meant offering a take-away service.
Despite the ability for pubs and restaurants to reopen today, only 40 per cent will be able to do so, with the remaining 60 per cent lacking the outdoor space required under Government rule. Additionally, hospitality owners are relying on good weather to bring consumers in and fulfil their cashflow needs, a tricky situation to be in with the unpredictable English weather.
It’s more than likely, and advisable, that we will see many venues continue with a takeaway service until at least the next stage of restrictions being lifted and the public can sit inside to eat and drink.
Deposit style payment systems
Whatever service you are providing or product you are selling, whether during a pandemic or not, if a consumer isn’t willing to pay at least half of the overall cost as a deposit, then they’re more than likely not serious about working with you.
To protect yourself and your business over the next few months, and into the foreseeable future if possible, ensure you set up a deposit system. It’s not an uncommon way of working, and it has only been made more popular due to the COVID-19 pandemic. Not only does it further guarantee that a consumer will go through with a transaction, but it also safeguards you if they pull out last minute. While you may not have 100 per cent of the money you expected, you do at least have a fraction of it – a real lifesaver in tighter times.
Do your tax return early
We’re six days into the new tax year and you’re probably being prodded from all angles to get your tax return done. I’m going to prod you again.
Getting your tax return done as early as possible in the new tax year not only means you’re ticking one task off your to-do list, but you’re also prepared for any payments that need to be made well in advance. No nasty surprises here.
A lot of business owners believe that when you do your tax return, any tax payable has to be made there and then, this is a myth. If you were to complete your tax return tomorrow you would know how much you would have to pay, but that payment wouldn’t have to be made until 31st January 2022. The earlier you complete your tax return, the more time you have to save for the payment and the less stressed you will feel. A win-win situation.
Today’s reopening is an exciting time for all business owners across the UK. As restrictions lift in the upcoming months, we will hopefully see the country regain its footing and truly start on the road to economic recovery. However, it’s crucial that businesses, especially SMEs, continue to remain vigilant and agile. As we’ve learned many times before, the virus is unpredictable and flexibility, agility and caution remain the three most vital traits of any successful business for the time being.