As government support under the job retention scheme is reduced over the coming months and ends on 31 October 2020 now is the time to start to review your business operations and consider if you need to make any savings. Employers will no longer be able to claim for Employer National Insurance Contributions or employer pension contributions on furloughed employees’ salaries/wages from 1 August 2020. Employers will also be required to contribute at least 10% and 20% of furloughed employees’ salaries/wages for September 2020 and October 2020 respectively. From 1 July 2020 businesses have the flexibility to bring furloughed employees back part time.
The Furlough Scheme along with CBILS and Bounce Back loans will have assisted to bridge the finance gap but a question remains as to how you can re-establish your business in a viable way. Here are 5 points to assist you in navigating this process:
- The first thing to stress is that you should get in touch with your professional advisors to help you analyse and determine the best course of action. Your accountant, solicitor and other business advisors should provide an important sounding board as well as professional guidance.
- How has the lockdown changed the demand for your services or products? Do you know what makes up the most profitable parts of your business that will be in demand as the economy starts to reopen?
- What costs are directly linked to pursuing a strategy of focusing on your most profitable business lines? These costs are non-negotiable, so what other non-essential costs can you reduce?
- The people in your organisation are no doubt a fundamental part of what leads to its success. So redundancy should only be considered when all other options have been explored. Those options could include voluntary pay cuts or reduced hours. Legal advice will be extremely important should redundancies be the only option.
- After analysing all of the above if you identify a funding shortfall up until the point when sales pick up to a sufficient level to support your business then get in touch with your bank or other finance providers without delay.