For England and Wales, the total number of corporate insolvencies for June was 1,207 - up 196 from the 1,011 recorded in May - a rise of 16%.
By way of comparison to the same period 12 months ago - these figures are 63% higher than June 2020 but remain 18% lower than a pre-pandemic June 2019.
The upward trend is the first consecutive monthly rise since October and November 2020. Those figures might have been expected to climb for a third month in a row if it hadn’t been for the third lockdown initiated in December 2020.
Although compulsory safety measures such as mask wearing and social distancing have been discontinued since July 19th, the number of Covid-19 cases continues to rise across the country at levels greater in some areas than last Autumn which directly preceded another lockdown.
With support measures due to be fully withdrawn at the end of September and creditor actions such as statutory demands and winding-up petitions being reintroduced at the same time, insolvency statistics could begin to rise at a faster rate from October onwards.
The 1,207 company insolvencies in England and Wales consisted of 1,116 creditors voluntary liquidations (CVLs); 38 compulsory liquidations; 39 administrations and 14 company voluntary arrangements (CVAs). There were no receivership appointments in June.
The only category that saw an increase on the previous month are creditor voluntary liquidations which are up by half and while CVAs have remained at the same number, administrations and compulsory liquidations had both fallen.
CVLs are the only insolvency category that was higher than its pre-pandemic equivalent, at their highest recorded level since March 2019, with the rest down 60% or greater.
Additionally, there were 77 company insolvencies in Scotland comprising 14 compulsory liquidations, 62 CVLs and one administration which was 67% higher year on year and 13% higher than in June 2019.
This was the highest number of monthly insolvencies recorded since February 2020.
Scottish company insolvencies tend to be driven by compulsory liquidations but since the advent of the first Covid-19 lockdown in March 2020, there have been nearly twice as many CVLs as compulsory liquidations - being the most frequent type of insolvency for 13 out of 14 months.
There were also 11 company insolvencies registered in Northern Ireland - 22% higher than in June 2020 but 62% lower than June 2019.
This was made up of one compulsory liquidation, nine CVLs and one administration.
The overall total of UK-wide company insolvencies for June 2021 is 1,295, an overall increase of 226 from last month’s collective total.
“Uneconomic to continue trading”
Christina Fitzgerald, Vice President of R3, the insolvency and restructuring trade body said: “The increase in corporate insolvencies between between May and June - to the third highest monthly figure since the pandemic started - has been driven by a rise in Creditors’ Voluntary Liquidations (CVLs).
“The Government’s decision to delay lifting the final Covid-19 restrictions for another month has clearly been a further blow to the business community and may have been particularly unhelpful for the hospitality and retail sectors, which have been hit hardest by trading restrictions and lockdowns.
“It may be that this impact has been reflected in June’s statistics as the rise in CVLs, used by directors to voluntarily close a company, suggests that for many directors the delay to the removal of the restrictions may have simply made it uneconomic to continue trading.
“However, we are heartened by the Business Secretary’s recent comments on HMRC’s planned approach to working with distressed businesses. In particular, the news that HMRC will take a supportive approach to rescue proposals from viable businesses is welcome, and we hope will support the profession’s efforts to support Covid-19 hit firms.
Summer is usually the time when people are looking at holidays and taking it easy so businesses will either be enjoying their slowest or busiest periods of the year depending on their location or industry.
This year has once again proved that normal service is a long way from being resumed.
The one thing we can say with absolute certainty is that the specialist advice is as good an investment of time right now as anything.
Whether it’s looking at making slight corrections to make a company more efficient and streamlined when demand picks up after the heatwave and home holidays dissipate, or looking at bigger restructuring or more drastic but necessary action - expert guidance is available here and now.
We offer a free initial consultation where we can learn more about your immediate challenges and provide you with a range of effective and efficient options that can be implemented to help any business get back on the right track.
It’s nearly been 365 days since the UK went into its first national lockdown as it faced its first major public pandemic in over 100 years.
From March 23rd 2020, companies in every sector closed by order and we all had to work, educate and shop from home to contain the spread of Covid-19.
Nothing has really been the same since - especially for businesses.
We’ve spent the past 12 months helping firms that have fallen into financial difficulties to restructure and pay off their debts under new arrangements or allow them to efficiently close so their owners can move onto new challenges when the lockdown is gradually lifted completely.
Alongside our business rescue and recovery work, we’ve also spent a year observing, collating and analysing data from various sources to compile a comprehensive and wide-ranging report of what happened to our country and its companies.
The “Year of Lockdowns” story shows what effect restrictions have had on the various industrial sectors, geographic regions and on the individual businesses and employees that make them up.
This is the story of 2020 - a "Year of Lockdowns”.
In an already historic year, we should start with the news about history being made.
The Office of National Statistics reported that 2020 saw UK official GDP shrink by 9.9% in the previous 12 months - the largest annual fall in over 300 years since the Great Frost of 1709.
The collapse is even greater than any previously recorded including during the Napoleonic wars; World Wars One and Two; the great depression of the 1920s and the great recession of the late 2000s.
The economy regained some ground in the second half of the year as some lockdowns were eased and the “Eat Out to Help Out” scheme attracted more people to support their local pubs and restaurants.
Despite these positive factors, the economy was still 6.3% smaller than it was in February, the last full trading month before the first lockdown was implemented.
This was the biggest fall among all the G7 nations with USA GDP down 3.5%; Germany down 5% and Japan down 5.6% by comparison.
Since the beginning of the lockdown and the Coronavirus Job Retention Scheme (CJRS) being rolled out, 11.2 million workers have been furloughed in the previous 12 months.
With 32.6 million people employed in the UK, this means that one in three workers was in receipt of furlough pay at some point in 2020.
The UK unemployment rate also rose by 1.1% to 5.1% by the end of 2020 with 1,744,000 additional people looking for work. This is the highest recorded level since 2015.
Chancellor Rishi Sunak extended the furlough scheme until the end of September 2021 in the recent budget with employers expected to contribute 10% of furloughed employees wages from July, rising to 20% for August and September.
The Office for Budget Responsibility (OBR) estimates that £73.6 billion had already been spent on employment support schemes such as CJRS and others by November 2020 so this will add to this already striking figure.
While economic and employment activity are expected to rise, greatly, in the next six months as lockdown is gradually lifted, the end of the furlough and other schemes will still create a moment of hazard for businesses and their employees if they can’t find a way to begin to trade profitably by then.
The Insolvency Service reported that since March 2020 there were 8,205 company insolvencies up to and including the end of January 2021.
Broken down by individual industrial sector they were :
The halting of various building projects, both large and small scale, have badly damaged the construction industry over the previous 12 months.
This might seem surprising given the historic damage experienced by the hospitality and retail industries but these have been well publicised and several were more visible to the public as an empty shop unit will be more noticeable than an empty building site.
There was also £453.4 million in redundancy pay and other support benefits paid out in 2020 which was the highest amount in ten years and an increase of 31% from 2019.
Another government agency, the Redundancy Payments Service, will make financial payments to employees whose former employers have gone into insolvency and cannot pay any legally due claims.
With the help of the Office of National Statistics and The Insolvency Service, we looked deeper into the regional insolvency statistics for 2020 and produced a comparative figure - the Corporate Insolvency Ratio - showing the likelihood of insolvency based on the numbers of active businesses in a region/nation and the number of business insolvencies recorded there.
The table shows the number of businesses registered in each UK nation and English region, the total number of business insolvencies and the Corporate Insolvency Ratio for each.
Because of certain statistical caveats, the figures are an approximation based on available data rather than a complete and official record.
On this matrix, the figures show that a business in the Yorkshire and Humber region of England was statistically most likely to undergo an insolvency event than in any other region (1 in 115) while a company based in Northern Ireland would be least likely (1 in 506).
Additionally, businesses in the North East, North West and West Midlands of England along with London were at greater risk compared to the national average (1 in 207) while Scotland, Wales and every other English region was less likely than the average.
Given all the news and information we already know about the year of lockdowns, it might be surprising to learn that the total number of corporate insolvencies actually fell in 2020.
They went down to their lowest recorded levels since 2007.
So what’s going on? The main reasons can be surmised as follows:-
With the exception of the insolvency moratorium, all of these measures are temporary and will be withdrawn by Autumn this year.
Ironically, 2021 could have many more corporate insolvencies than 2020 had.
Chris Horner, Insolvency Director with Business Rescue Expert said: “Ominously, even with restrictions being lifted and economic activity rising, 2021 will be a worse year for insolvencies in several industries than the year of lockdowns was,
“Government support in the form of backed loans, furloughs and the temporary ban on winding-up petitions and other creditors actions are all expected to end sometime in 2021.
“Bounce Back Loan repayments and others will begin to come due, businesses will have to decide if they can re employ or redeploy their furloughed workers and creditors that have been under severe financial pressure themselves will finally have the ability to look for repayments that might be critical to their own survival.”
Debenhams was formally wound-up in the High Court with BooHoo buying its online brands and trademarks to relaunch as an online-only retailer.
The Topshop, Topman and Miss Selfridge brands of the Arcadia group were bought by ASOS with BooHoo returning to purchase the remaining Wallis, Burton and Dorothy Perkins brands.
No physical properties were included in any of the deals.
BrightHouse, the UK’s largest rent-to-own retailer went into administration in April along with Laura Ashley while fitness retailer DW Sports announced it would not reopen in August.
Regional UK airline FlyBe went into administration in March where it remains until a buyer is found. With other carriers unable to operate a regular, reliable UK-wide service yet, 2021 is another year that might have historical consequences.
Research from the Local Data Company shows how devastating the year of lockdowns was for the retail industry.
They estimated that 17,532 chain store outlets located in high streets, retail parks and shopping centres closed last year - an average of 48 per day. This is compared to an overall total of 7,655 openings to replace them, or 21 per day.
The net loss of nearly 3,500 locations was a third higher than in 2019.
“The rise of online shopping and home delivery which provided a shot in the arm for the hospitality industry, might be a more mixed blessing for retail” said Chris Horner, Business Rescue Expert’s Insolvency Director.
“We won’t know for some time how many new habits and shopping methods we adopted in 2020 will stick in 2021 and become permanent or how many will revert to the previous physical model.
“Some companies might bet big one way or another and hope to reap the benefits of being a successful early mover. Others might hedge their bets and hold back investing, redeployment and retraining which could prove more sensible in the medium and long term but would impact negatively in the immediate future in terms of investment and activity.”
We still don’t know how 2021 will unfold as many businesses are still unable to open their doors and trade freely and some won’t until we get into the Summer at the earliest.
For others, even when they do return, they’ll find that customer behaviour, retail trends and other changes will mean that they will have to recalibrate their own offerings if they want to make up lost ground.
One thing we can guarantee this year, maybe the only thing that can be, is that Business Rescue Expert will continue to be here to help advise and guide any business that is having financial issues or doesn’t know what their next professional step should be.
We offer free virtual consultations for any company that needs to clarify its position and understand what options are open to it.
The benefit of acting first is that you usually find you have more choices and strategies available than whoever acts second.
Get in touch and find out what they are for your business - today.
The government announced their roadmap to recovery this week with lots of excitement and anticipation from businesses - especially in the restaurant, pub and nightlife sectors.
Many will have been scouring the pre-announcement reports looking for hints that they might be able to throw open their doors to clamouring customers within weeks and might have already been making inquiries with their suppliers about when they could resume their regular orders and in what quantities.
The news that the Covid roadmap would allow for more gradual opening than anticipated will have come as a disappointment for some who would have been banking on an earlier lifting of restrictions.
Under the current plans, pubs and restaurants will be allowed to open indoors no earlier than May 17th.
This follows some “outdoor only” venues that could be allowed to open five weeks earlier from April 12th.
There are no planned reintroductions of 10pm or 11pm curfews but the Rule of Six will still apply to any indoor dining that takes place.
The news that they can eventually reopen is welcoming but again, hospitality will be among the last sectors allowed to trade as the country reopens.
This is scant consolation to businesses, many of whom spent hundreds of pounds last year making their businesses Covid compliant and haven’t been allowed to put any of these improvements to the test in any meaningful way yet.
Kate Nicholls, the CEO of UKHospitality, the industry representative body who have been amongst the most vocal in speaking up for their members interests during the pandemic is still combative on their behalf.
She said: “The sector is obviously devastated that its reopening will be so far away.
“From the start of November, the sector will have been closed for nearly 200 days, with just a couple of weeks of heavily restricted trading in December. A major package of financial support is imperative if hospitality is to survive.
“The Prime Minister says that the reopening schedule is driven by data, yet all the data points to hospitality being relatively safe and linked to only a tiny number of cases.
“Vaccinations and the fall in infection rates has de-risked our reopening even further. Over the past year, the Government has repeatedly miscalculated the risks posed by hospitality.
The Hospitality sector is not just made up of customer-facing venues like pubs, bistros, coffee shops or restaurants.
It employs thousands more in supply chain businesses that make sure these businesses can be quickly stocked and restocked with fresh ingredients, whenever they need them and quickly.
UKHospitality have identified this relationship as one that will be under the severest pressure before and during any phased reopening and is calling for additional support for suppliers now to ensure that no gaps open up in the system as suppliers fail through no fault of their own.
Katie Nicholls said: “The totality of hospitality is dependent on its supply chain.
“If supplier businesses fail, then the entire sector grinds to a halt and we’re at risk of the whole thing collapsing. We’re hopeful that hospitality businesses can lead the recovery of the UK’s economy this year.
“This cannot happen if businesses are not supplied to do the job. The supply chain is everything and it must be supported. Otherwise, our sector will rapidly become a house built upon sand and the terrible damage that has been felt over the past twelve months will only be compounded.”
A lot of companies will be keeping everything crossed for some relief and help in the forthcoming Budget on March 3rd.
Hoping for some certainty that support measures will be extended until they can reopen and begin trading again, but if the year of lockdown has collectively taught us one thing it’s that nothing is certain either with the pandemic nor the response.
Regardless of what is announced by the Chancellor next week, many restaurants, pubs and bars will still have some big questions marks over their future in the coming weeks and months if they are determined to try and reopen.
That’s a big if.
Unfortunately, for many businesses owners and directors, once emotion and wishful thinking are removed, their future direction will be clear.
Closing the business may not only be the right option for them and the company’s immediate future but also for the longer term too.
Once the country is further along the roadmap and the lockdown lifting becomes permanent, the conditions to relaunch a new business with no debt burdens holding it back will be far more advantageous.
But before any new venture can be launched, the existing business has to be closed properly with a minimum of fuss and any creditors have to be dealt with properly and professionally.
We can help you to help yourself - but only if you get in touch with us first.
Whether the right solution would be closing a company or some other options such as using an insolvency moratorium to provide previous breathing space while you work out what your next step should be, we’ll be able to talk you through your options and what you need to do next.
We can also advise you on any changes you can make if you’re planning to roll the dice and reopen when you’re allowed to.
This could still be the year when everything changes for the better - but only if you act now while you’ve got time.
You’ll know when the best time to push your two for one special offers are; what drinks go best in happy hour and what combination of flavours work best to complement each other at any given food service.
You’re adept at influencing and positively manipulating your customers wants and needs before they realise they are displaying them so you understand just how important customer behaviour is in influencing and driving their decisions.
Some of the most fascinating and profitable insights can be gained in the space between what customers say they want and what they actually purchase.
Understanding this small but significant space can help us make sense of some seemingly contradictory evidence based on customers' attitudes to the Covid-19 lockdowns currently in place.
Opinion polls found that over 70% of respondents agreed with the latest national lockdown announced by the Prime Minister on Halloween.
What happened next is where the deficit between the opinions and actions meant that restaurant and bar owners who fundamentally understood their customers could take advantage of their desires.
When it was announced that the lockdown was due to be implemented, it gave customers a four-day window to react in advance of the lockdown. As an overwhelming majority favoured the lockdown, you might think that they would take the extra time to prepare for an extended period at home and maybe get some extra supplies and luxuries to pass the time more agreeably.
What actually happened, as any good pub philosopher would have told you, was that hundreds of thousands of people went out to enjoy themselves.
OpenTable, the site that tracks online restaurant reservations, reported that bookings rose by 11% the day after the announcement compared to the previous year and on the day before the lockdown was imposed, they rose by 70% annually.
Data for foot traffic at retail parks showed that they also spiked in the three days before the lockdown - being greater than their 2019 levels for the first time since the Covid-19 safety measures were introduced in March.
Another piece of the puzzle landed last week following the news that a largely successful Covid-19 vaccine had been developed - online searches for holidays in 2021 leapt by 48%.
At first glance it appears counterintuitive. People are in favour of lockdowns and tighter restrictions yet in case after case, it appears that actions speak louder than words.
35 million people took advantage of the “Eat Out to Help Out” scheme in August even though Coronavirus infections remained stable. Once the scheme ended, restaurant custom plummeted. When restaurants were told that they would be closing, they were packed in the three days leading up to the final bell.
Similarly, NHS Track and Tracers are reporting increased difficulties in reaching potentially infected individuals by mobile.
One explanation is the increasing reluctance to answer calls from unknown numbers but equally the suspicion remains that there could be financial repercussions from being ordered to self isolate so it would be beneficial to practice feigned ignorance to avoid it.
Weighing the evidence then, what is the most likely result for hospitality businesses when they are finally allowed to reopen, for argument's sake, without restriction on December 2nd?
Full houses as families and individuals take the chance to enjoy a meal and drink out with friends and family they haven’t been able to meet up with in weeks and months.
The cloud on the horizon is that all expert analysis, evidence and experience points to the immediate return of the tiered local system of restrictions being resurrected and ominously, according to the Bank of England, staying in place until at least the end of Q1 2021 - that’s March.
This is when the extended Coronavirus Jobs Retention Scheme (CJRS) furlough is due to expire although some expert predict that this would invite a similar surge in cases so the only adequate response would be more lockdowns - either locally or nationally - in the New Year.
The answer lies in finding the sweet spot between the competing demands of public health, normal economic activity and individual freedom. There is some recognition of this among policy makers as the second lockdown period is already shorter and less restrictive than the first as they recognised that despite what people were telling opinion polls, more would be willing to break rules to socialise and shop.
If you’re relatively successful at reading and understanding customer behaviour in your restaurant, cafe or bar then you could try to apply the same judgement criteria to what the official response will be.
Weighing up the competing motivating factors - will the lockdown be in place for Christmas? Will they waive the rules for a week but look to impose a stronger, longer lockdown afterwards to make up for it? Will more people welcome stronger restrictions in the traditionally darker and quieter months of January and February? When will the first virus trials and inoculation programs be likely to be implemented? Will this affect your customer base? - it might if it’s disproportionately made up of senior customers.
Everybody has opinions about how to best combat and beat the virus but if you run a hospitality business then it might be viable for you to apply your innate knowledge of what people eat, drink and do rather than what they say they do to build a reopening plan based on this evidence.
Combined with your existing customer data, you can produce a draft roadmap that could help you with your stock, supply and staffing requirements in advance of the busiest season of the year.
You’ll have to make contingencies and be agile - what services could you offer under various types of local lockdown for example - but there’s no reason you can’t start laying the foundations of your winter recovery right now.
Another easy step you could take would be to get in touch with us to arrange your free initial consultation.
Like you, we don’t have a crystal ball, but we do understand our industry and we know how creditors, HMRC and other businesses dealing with administration and insolvency think and act.
You can use what’s left of the enforced downtime to shore up your company’s financial defences so that if there’s another unexpected and unwanted closure, you’ll be in better shape to see it through.
But in a sign of how desperate the feeling in the sector is, 61 chief executive’s have written an open letter to the government demanding that the current lockdown in England is not extended beyond its current date of December 2nd.
The signatories including the bosses of Marks and Spencer, Dixons Carphone and JD Sports say that November and December make up 20% of annual retails sales and any extension could result in “hundreds of thousands of job losses across the sector”.
As well as more clarity around the plans for December reopening, they are urging for Sunday trading hours to be extended in the run-up to Christmas to help make up for lost sales and increased demand from frustrated customers.
Helen Dickson, chief executive of the British Retail Consortium, said: “To avoid local communities being hit hard by large scale shop closures and job losses, the chancellor must address three issues - rents, rates and reopening.
“The government should extend the rent moratorium, giving essential breathing space to allow negotiations between retailers and landlords to continue.
“It must ensure retailers do not face an £8 billion rates bill in 2021 and it must ensure shops can reopen from the start of December as the all-important Christmas shopping period gets into full swing.”
The letter reads in full:-
Sir, With less than two weeks to go until the chancellor’s spending review, it is vital that retailers get the clarity they need over the future. Christmas is fast-approaching and half of retail has been forced to shut – depriving these stores of around £2bn per week in sales.
November and December account for over a fifth of all retail sales and if all shops are not allowed to reopen by the start of December, many stores may never reopen putting hundreds of thousands of retail jobs at risk. A continued period of retail closure will see more shuttered high streets and many more job losses at the heart of the festive season.
Government reports have noted that the closure of shops would have a minimal impact on the transmission of Covid. Retailers have invested hundreds of millions in making their stores Covid-secure, keeping both customers and staff safe.
Yet retail stands on the brink and decisive government action is needed to save it. Retailers of all shapes and sizes must be allowed to reopen by the start of December. Without this, there will be little festive cheer left on our high streets.
Even with the added protection of safety in numbers, it’s still unusual for so many high-level executives to put their heads above the parapet and speak out collectively about public policy.
It also indicates the level of nervousness and worry in the sector that even if the national lockdown is lifted, it could be replaced by local lockdowns that could be just as restrictive to retail, hospitality and other businesses labeled as “non-essential” and subsequent to closure orders.
We can advise you on what steps you can take to improve your chances of making it into 2021 in good shape and ready to resume profitable trading when everyday life begins to resemble something like normal again.
Firstly, its announcement came on a Saturday when most people were doing something else and leaving owners and directors with little time to come up with or reactivate a lock down plan they thought had passed its use-by date.
Also the terms of this lockdown differ from the previous national version which leaves some opportunity for skillful retailers to adapt and survive the immediate future in the hope that this one does last just four weeks.
The “non-essential” stores that are being ordered to close include:
The British Retail Consortium estimates that stores will see approximately £2 billion in lost sales every week they remain closed so any income will be welcomed in this period.
The Coronavirus Job Retention Scheme (CJRS) was due to expire on October 31st but has now been extended to March 2021 at least. It will continue to pay 80% of furloughed staff wages up to a maximum of £2,500 a month.
Crucially, employees made redundant after September 23rd can be rehired and furloughed by their employer as long as they were on the payroll on or before October 30th.
Businesses can also claim other financial support if applicable including grants of up to £3,000 for the month they’re closed.
“In the midst of chaos, there is also opportunity” - Sun Tzu
In a much misused and mistranslated phrase, Sun Tzu sumarises the situation facing many retailers.
Their carefully planned and Covid secured stores are now to be closed if they are classed as non-essential.
So should they just pull down the shutters and wait until the all clear sounds hopefully in time for a busy Christmas season?
No - there are several changes and adaptations they can make to their businesses to keep trading during the window and increase their viability and appeal as they move into the exciting world of omnichannel retailing.
Click and Collect
Some larger retail outlets have adapted the click and collect model seamlessly into their businesses before lockdown but this provides a great opportunity to if not pivot entirely to the model, then at least dip a toe into the water.
For retailers with a physical outlet, it’s imperative that it is used, especially if it’s still being rented and utility bills being paid on it so it can function in a different way than a regular shop.
It can be repurposed into an order fulfilment hub so instead of allowing customers in to browse and purchase, they will attend purely for the purpose of collecting the order they have already completed with a minimum of fuss.
Under the terms of the latest lockdown, all non-essential shops can offer either deliveries or click and collect options, so it is a way to keep staff employed and the lights on while continuing to serve customers.
Delivery options are also a great way of repurposing existing staff so they don’t need to be furloughed or let go.
Some customers will understandably be nervous about venturing out to a store, regardless of all the precautions you’ve been taking so you might have to go to them.
Staff can deliver the goods themselves or you can quickly incorporate a logistics chain which could involve quality control, order fulfilment, packing, loading, customer service, aftercare and several other new jobs they can do that would be different from their previous employment duties.
For some products such as alcohol, the new rules mean that it can only be sold via delivery as long as it is pre-ordered online or via phone or post.
Pre-ordered drinks can be sold to or collected by a customer provided the purchaser does not enter inside the premises to do so.
Shop window advertising/displays
While some businesses might be tempted to pull down their shutters for a month - if you have public-facing display space then think again.
It’s the perfect product display space and can be a powerful visual reminder and prompt to customers to purchase your goods online. One of the disadvantages of the internet is that products are primarily displayed as a two-dimensional picture, being able to have it on show will be an advantage.
We’re also approaching the Christmas season which a lot of potential customers will be looking forward to even more as a distraction from the upheaval of the year.
A lot of retailers are using the space to create Christmas themed promotions both to promote the business and generally cheer customers up. While not every business can be like Fenwicks in Newcastle or Hamleys in London, they can brighten up their own high street
Another shift in customer behaviour brought about by enforced home working and lockdown is an increased understanding and awareness of how much of a product they consume on a regular basis.
When you’re able to pop out to the shops to replenish supplies, it’s easy to forget or just not realise how much coffee, food or toiletries are used.
If your business involves consumables then this could be the ideal time to introduce a subscription service to make it easier for customers to buy the products they use most and ensure that they buy more so they don’t run the risk of running out.
A simple but recurring system will take the stress away from customers and set up a regular income stream for the company - and could also lead to more sales of related products once they see how easy and beneficial the new way of buying and delivery is.
Some businesses require staff to be on the premises to do their work but others have adapted to allow them to do some assembly or other work at home that is usually associated with the business - whether it be tailoring, sales, assembly or other tasks that can be completed with sufficient materials.
Service providers are also finding that the huge increase in video calls is a new niche that they can use to better engage with their customers virtually.
Beauticians, spas and hair colourists usually really focus on personal interaction in a salon setting but video calling has given them an opportunity to move into expert tuition and guidance. They can sell beauty products and supplements and provide a one-to-one service where they can show the buyer how to apply and use them properly.
Additionally they can host regular masterclasses on new products and how to apply them correctly and can simplify the purchase procedure by posting the link directly on the cast or sending it to the participants individually perhaps with discount inducements to get them to buy more than they previously would have.
If you are looking at online retail for the first time then there are several different approaches you can take.
As well as adding transaction e-commerce functionality to your own website, you can create storefronts in some of the biggest online marketplaces like Amazon, Ebay and Facebook Marketplace.
If your business sells more specialist products then there might be specialist websites for customers interested in them - Etsy, for instance for homemade goods or Bookshop - an alternative marketplace specifically for UK independent booksellers.
Some sites are going even further. Streetify is attempting to recreate the traditional high street digitally - allowing users to “walk” up and down a high street that is represented by virtual storefronts. Users can then visit them and take advantage of any specific deals, sales or other options from within.
For some retailers even the most brilliant new innovations might not be enough to see them through the latest lockdown and into the new year.
But there are other options available to them that could allow them to keep trading with some changes.
They could look to obtain an insolvency moratorium - a new legal protection designed to give companies up to 20 working days of “breathing space”. This allows insolvency professionals to work with them to restructure the company and emerge stronger and more viable while creditors pause their actions to allow it to happen.
There are other options available to help them including CVAs or administration but whatever situation your business is looking at you should get in touch with us first.
A free, initial consultation with one of our expert advisors will give you some clarity about your options and what you can do next for your company.
Whether it’s adopting some new tactics and strategies to fit the new lockdown or a more substantial change of direction - we’ll help you get there.
The Art of War is consistently one of the best sellers in the business section and there’s hundreds of more books about adapting and implementing successful military tactics and strategies into a business.
Some ideas might be more appropriate than others, unless your business is shooting people in which case they could be lifted wholesale but we digress.
Sometimes business tactics and military tactics converge - other times they are poles apart but there is something to be learned about leading a large group of people towards a common goal that appeals.
The ironic thing is that even some of the best generals are guilty of one of the most obvious and costly mistakes any leader can make - deploying the same tactics against a new tactical situation and expecting the same results.
The first week of July sees the anniversary of two such tragic examples.
The Battle of Gettysburg and The Battle of the Somme were fought some 53 years apart with different armies and weapons but ultimately the results were the same.
Two great leaders - General Robert E. Lee of the Southern Confederacy and Field Marshall Douglas Haig of the British Army - both did what they’ve always done but because circumstances had changed, didn’t get the same results.
Lee recognised his error but the damage was already done and the Confederacy was defeated less than a year later.
Haig doubled-down on his mistake and sent thousands more men to their deaths in sadly predictable circumstances before changing tack and tactics later in the war.
You’re probably not about to command an attack on a defended position so what does all of this have to do with you reopening your business as the Covid-19 lockdown eases?
It’s because the situation on the ground has probably changed for your business and if your approach hasn’t then you too could be looking at an expensive and possibly terminal defeat.
The new rules about social distancing, PPE and cashless payments have fundamentally altered the ground for any physical business. Even online companies might find their supply chains compromised and stretched beyond breaking point, assuming they have enough funds to pay suppliers on time.
Businesses in the hospitality sector are suffering even more, assuming they are allowed to reopen this month and some headline-grabbing recent announcements from the Chancellor aimed at the sector including a 75% VAT reduction for six months and a discounted midweek meal scheme for restaurants and cafes.
These measures are all temporary and there’s also the spectre of local lockdowns being reimposed anywhere across the country, so even if you make a promising start to your post-Covid-19 trading, it could be halted at a stroke.
Fortunately the weapons at our disposal have changed too - giving us more scope and options to help a business dig-in for a long campaign and restructure their finances to become more resilient to any more downturns in finance or fortune.
Get in touch with us today and we’ll arrange a convenient virtual free initial consultation with one of our expert advisors.
Once they understand your circumstances and situation, they’ll be able to draw up a strategy to help you navigate through the current environment and return to positivity and profitability sooner than you might think.
Nearly half of the respondents in the latest survey (44%) said that their financial reserves would last them less than six months.
Even with the help of various support mechanisms such as the Coronavirus Jobs Retention Scheme (CJRS), cash grants and business rates holidays, they still forecast that they’d be unable to pay their bills by the end of the year.
27% said they’d be able to last beyond this period but another 24% said they don’t know how long they could survive. A further 4% admitted that they had no cash reserves at all.
So there’s the obvious financial imperative to reopen and restart trading but it’s not going to be business as usual.
Businesses are going to have to prepare for the permanence of some changes that have come about in the past few months.
A joint survey between O2, ICM and YouGov found that 45% of workers expected to continue to be able to work flexibly and remotely once the lockdown is lifted.
81% expected to be able to work remotely at least one day a week and 33% for at least three days.
The flipside is that people have started to forget what the usual working environment is. 30% of respondents have admitted to feeling lonely and just over a quarter said they mostly missed socialising with work colleagues.
What kind of world will companies be facing when they are free to reopen their doors?
Some industries may see an immediate upturn in business back to comparable levels before the lockdown was introduced but others could be living with the effects and changes for years to come.
It’s hard to imagine the restaurant and hospitality industry enjoying full-to-capacity dining rooms this year or even before a vaccine is developed and widely available.
Packed dance floors at night clubs or sports events with thousands of spectators might remain a memory of the past - and one that a new generation of consumers won’t want to recapture or revisit.
This is all without factoring in any possible prolonged economic downturn or reduction in the public’s discretionary spending. Less money for purchases means less going to businesses that badly need it and this deflationary chain reaction could prove to be the death knell for entire industries.
It’s hard to see how cruise ships or airlines could survive in the medium to long term if they scaled back their operations to mirror the scarce and expensive prices experienced in the “golden age of travel” in the first half of the twentieth century for example. Spas and massage therapy that function on physical contact will find it hard to function and it might finally be the end of the food buffet.
So what practical decisions can a reopening business make to immediately improve it’s position?
Extra time to pay, improved credit facilities or the chance to build a stronger relationship with your suppliers is one you should take.
You should update your business plan too to reflect this - not only will it give you a clearer picture than predictions made before the Covid-19 pandemic but you would use this to obtain any additional finance from this point forward too.
Whether it’s with your suppliers, customers or staff - they will appreciate that you value them enough to be truthful and you won’t have to backtrack or shift your position to cover previous inaccuracies.
Company Voluntary Arrangement, administration or liquidation might be the logical path to take to enable a business to close quickly and efficiently before a new one can be formed better equipped for the new marketplace.
If there’s one positive that has come out of the uncertain economic landscape we’re facing then it’s that more businesses are beginning to understand and recognise that administration and insolvency could be the saving grace for their company and staff.
As well as being an opportunity to restructure the business so it has a realistic chance of prospering, administration provides a vital breathing space from creditors to allow business owners and directors to carefully plan their response.
The easiest first step for any company interested in reviving and revitalising itself is to get in touch with an expert for advice. Specifically, a Business Rescue Expert.
We’ll arrange a convenient, virtual initial consultation to discuss your situation and plans then work with you to come up with the best way forward. The sooner you get in touch, the sooner we can get to work on your goals.
“When discovering a new land - the first thing the French build is a fort; the Dutch, a harbour and the English? An alehouse.”
There is nothing more central to British cultural life than the pub.
Whether a Tudor beamed coaching inn overlooking a village green, a vibrant industrial chrome and glass city center sweatbox, or a glorified living room with the same three people sitting in the same seats every night of the week, the pub is the quintessential touchstone of British life.
Births are celebrated, deaths are commemorated and marriages are announced with days-long sessions. Loyalties and bonds are formed within that can last a lifetime - you have your first drink, you turn out for the team in Sunday League and eventually you graduate through darts to the bowls or dominos teams - which if anything are even more competitive and cut throat than the football was.
It’s something of a surprise then that such a critical part of the national psyche wasn’t singled out for specific protection and support in the same way that other businesses in the wider leisure and hospitality sector have.
While some could take advantage of business rates relief and others the Small Business Grants Fund (SBGF) or the Retail, Hospitality and Leisure Grant Fund (RHLGF), not every pub is eligible even though all are facing the same existential threat.
Some are also having to continue to pay rent to the same company that supplies their main product - beer.
The "beer tie" is a traditional but controversial covenant under which the tenant of the pub pays more for the beer than would be expected but this is usually in exchange for lower rents.
Under normal circumstances, this might be a tenable arrangement but with no income being received by the tenant from across the bar, it's becoming a bone of contention.
So far of the six large pub-owning groups in the UK, only Admiral Taverns, has offered a rent cancellation until the end of April for its tenants.
After that, any of its pubs that didn’t receive any additional government support would remain free of rent and any that did receive help would only be asked to contribute a small percentage of it as rent, in most cases less than half of what they would usually pay.
The situation is similar to the stand-off that is developing between retail landlords and their tenants that we’ve covered in an earlier blog.
It seems likely that landlords will have to restructure rents but are holding out too see whether there is government regulation. Sadly for publicans, the delay is causing more sleepless nights wondering whether they will have a business left by the end of the Summer.
There was some hope that the industry would avoid being the first in and last out of a lockdown with the announcement of certain specific lockdown conditions being eased.
The Prime Minister mentioned in his televised address on Sunday that some in the leisure industry could open again within two months provided social distancing rules were enforced, but this was later clarified to only refer to cafes and restaurants with outdoor space; pubs in England must remain closed until July 4th at the earliest and possibly beyond.
Apart from the logical and moral contradiction that, for example, an outdoor restaurant that also sold drinks would be back in action soon but a pub of equal size with a large beer garden that also sold food wouldn’t - collectively the industry is worried.
Emma McClarking, Chief Executive of the British Beer and Pub Association (BBPA) said: “With insufficient clarity as to when pubs will reopen, our sector remains in limbo and facing severe uncertainty and financial devastation.
“If the government plans to keep pubs closed until the final phase of release, this would make pubs first in and last out of lockdown.
She also estimated that 40% of members, some 19,000, said they could close if they didn’t get any additional financial support by September.
Her comments were made before Chancellor Rishi Sunak announced that the government was extending the Coronavirus Jobs Retention Scheme (CJRS) to allow staff to continue to be furloughed until the end of October 2020.
Additional details will be published shortly but staff will continue to be paid at 80% of their wage until the end of July; other changes will see a reduction in the amount paid by the government with more assistance to be made up from the employer.
Crucially, furloughed staff would shortly have the option of returning to work on a part-time basis without forfeiting any income which could help pubs, when they prepare to eventually reopen.
Although any easing of the lockdown thoroughly depends on the available science and advice, one thing for definite is that it will end one day.
Whether that’s weeks or months away, bills need to be settled, staff need to be paid and premises need to be secured. All of these would put pressure on even the most profitable pre-pandemic company.
What options you have for your business depends on what decisions you make now - before the lockdown is lifted.
There are always economies and changes you can make to help free up any financial space you can along with other moves that can ultimately keep your business afloat.
The first one being getting in touch with us.
We’ll arrange a convenient, free virtual initial consultation with one of our expert advisors to discuss your unique situation and circumstances.
Once we understand where you’re at right now, we can help you plan the most efficient and effective way forward for you and your business.
We’re living and working through some unprecedented times but getting good advice will never go out of fashion.