insights
Beyond CBILS - other sources of funding and support
Much has been made of the Government’s support for business through CBILS and the Corporate Finance Facility but there are other sources of funding and support to consider.
A mix of tactical and strategic ideas that company owner-managers can use to survive the Coronavirus crisis (and plan for life once it’s over).
It seems obvious – but some businesses are less stressed than others right now, such as those with subscription income which may have been paid in advance. Yet even they need to conserve cash. There are big challenges to come, supply chains may falter and demand will surely drop. Your cash flow issues might be delayed until the summer or autumn, so save money now.
When it comes to cost cutting don’t ask what can I cut? Start by asking what I really need. Work out how long a runway you can project if you get your burn rate down, and then try to extend it?
Have your own “COBRA” crisis team, senior-led but pulling talent from all functions of your business. You’ll need to manage differently and be more agile until this is done. We’re in the first phase waiting to see what the impact will be on the economy and our customers and you need to have a team ready to help you withstand any changes to your business.
Get a second opinion, and find someone to be a sounding board. Someone who can understand the issues and challenge your assumptions and actions. Some will have a non-executive director who can do this? We are working with a number of businesses in this “sounding board” role and we’d be very happy to take a call from any business that just wants a view on what they’re doing. Beyond that we can help with strategy and raising finance. Have a look at our dedicated Financial Advisory offering.
As Donald Rumsfeld, former US Secretary of Defense said “There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know.”
This is a helpful framework. Your known knowns are the hard facts that successful crisis planning and response needs to be based on. You need reliable data from your business. At the opposite quadrant your unknown unknowns mean you need to think through different scenarios in detail.
To paraphrase Tony Blair, communicate, communicate, communicate – within your crisis team and with finance, HR, operations people. You also need to tell your stakeholders, your staff, customers and suppliers what you’re doing. Communicate regularly and not just about business issues but also so that you can supervise differently with your team working remotely. Encourage everyone not to neglect their well-being. And encourage innovation – who knows what good new ideas might arise as people work differently and in different groups.
I’m sure we’re all seeing examples of retail businesses pivoting online, and wholesalers pivoting from B2B to B2C. Consider whether there’s a different product or service you might offer or a different market or route to market that’s a viable option.
It’s easy to get bogged down in the crisis. But normal times (or the new normal) will return. The economy will have taken a hit but there may be pent up demand, and there will be opportunities. Once you’re through the short-term, focus on cash management and solvency as you will need a broader resilience plan because the economic shock will surely disrupt some long established industry structures. That might reset some of your competitive positions. And bear in mind that many businesses need more working capital as they grow, a pattern that was a problem in some past recessions leading some businesses to fail on the early upswing post-recession.
Whatever you do now to your business needs to allow for ramping it up again later. Counter intuitively that means keep marketing as your audience must still hear from you. But temper your messages so don’t keep sending out the same programmed content that would be inappropriate for the present time.
There’s been a slew of government schemes to support business through this crisis. Have a look at my blog post on how to get beyond all the endlessly repeated details of the schemes and take a practical approach to getting the best from them including how to approach your bank.
But remember tax deferrals, rent holidays, interest holidays, and the Coronavirus Business Interruption Loan Scheme are still debt and will have to be repaid at some point. That said for many they will be a lifeline to get through this crisis. Just make sure your post-corona plans allow you to repay them.