Coronavirus (COVID-19): Small Business Guidance & Loan Resources Business

The Coronavirus appeared out of the blue and flabbergasted everyone with its rate of spreading and harmful after effects. It was soon declared a global pandemic by the World Health Organization (WHO), and everyone panicked.

As a reactionary measure, the central governments of many countries in the UK, Europe, Asia, the US imposed strict lockdown measures to curb its spread.

As a result of which, almost all the offline businesses with irregular cash flows had to shut their operations and sit at home. This posed a significant challenge for the survival of these business owners and people working in it. 

Some of the established businesses with a dedicated history and somewhat consistent cashflows and liquid cash survived this wave of misery. However, on the flip side, the small and mid-size businesses owners faced one of the most challenging times of their entrepreneurial journey. This is because there were no sales due to lockdown and business costs (both fixed and variable) needed to be paid. Thus only cash outflow was happening with no cash inflow signs.

This problem is still not over even after these businesses have started to open up with the easing of lockdown measures. The sales of these businesses will take some more time to pick up since people in the UK are still oblivious of stepping out of their homes to stroll and shop around in the markets.

Also, the new strain of Coronavirus detected in the UK has made things worse, and the country is again in partial lockdown. More dark clouds hovering ahead for these small and medium-sized businesses and getting access to credit from established commercial banks are also complicated for them.

Start-ups and Small Businesses During COVID-19

These start-ups and small businesses surely need some guidance in these testing times and with not much business acumen and experience. This guidance is about how they can sail through the current pandemic and emerge stronger by having a robust business model. Let’s start by seeing some of the pertinent issues these small companies usually face or are currently facing. Here it goes:

Access to Easy Capital

The need for credit in business is always there, and at times of such crisis when there are no sales opportunities, it becomes even more pertinent. These external events restrict the financial capacity of the business to pay salaries to their employees, payments to their vendors and suppliers etc.

Big banks do not usually entertain these small companies due to high credit risk. These companies do not have a consistent cash flow and uncertainties in their business with nothing substantial to give as collateral.

Thus, to sail through such pandemic as situations going forward, start-ups and small businesses should ideally prepare in advance. The only way to do that is to explore financing options which will lend to them when they feel the need for loans. These financing options could be established by commercial banks, direct lenders, peer-to-peer lending institutions, digital-only banks etc.

Manpower Planning & Capacity

Circumstances like the current epidemic impact your clients and customers, but hang on, what about your employees? Your workforce is equally important, and they are an integral part of your business and the brand you have built over the years. As a business owner, you have to take responsibility for your workforce with the right skills to even work competently from home in this pandemic.

Supply Chain Disruptions

When trade routes are closed in such situations, and the supply of raw materials being sourced from foreign countries is restricted. Thus, as a business practice, businesses should maintain adequate inventory levels if they sense something which might impact their trade from other countries.

They should tie-up with multiple distributors instead of one, allowing them to follow Just in Time (JIT) stocking. Their suppliers should be reliable, who also gives these businesses a sufficient credit window for payment. The bottom line is: work on your supply chain’s robustness so that their business remains a going concern in external events.

Insurance Coverage

If there is one thing that people and businesses have realized the importance of, it is unarguably the need and power of insurance. People and even small companies are usually reluctant to buy insurance to hedge several risks which can destroy everything they have created. This is because of regular premium payments which many small business owners feel as if it is a waste of money.

It is advisable by several business consultants to have a business interruption insurance to cover themselves in concerning situations like the one we are witnessing currently. If your business already has one, then check when it is expiring and renew it beforehand.

Changing Industry or Market Dynamics

There are some unexpected circumstances when the regulators or the central government impose access control measures or restrictions on free movement, which acts as an impediment for your customers to reach out to you. This puts small businesses with not so deep pockets at greater risk, which strain your business finances.

To combat such a situation, you can hire an independent consulting agency of experts who can draft a resolution plan for your business. This plan will help them navigate any such uncertainties and continue to cater to your customers’ demands.

Advertising & Promotions

You must have seen numerous advertisements and social media campaigns of stalwart companies on offline and online channels. It is hard to see advertisements for start-ups, small and mid-size businesses on social media channels. This could be due to financial to strategic reasons, but it is imperative to get noticed to get more business and, subsequently, more profits.

As a small business, you have to make efforts to communicate your customers’ value proposition. It builds credibility, and with customer testimonials, it is expected to work wonders for your business. To start with, you can develop your website and post all the relevant content about your business.

Next, you can think of creating a social media presence with a dedicated page of your business for people to engage with you and give online orders. Companies like Amazon, Google, and many more are offering these opportunities for small businesses to scale up their operations by becoming sellers on these e-commerce platforms.

The bottom line is pretty straightforward, and it is the first mantra of any business in any industry operating in any part of the world. It is no matter how good your product or service is, but you cannot be successful until the customers know about it. Thus, focus on that aspect by riding on this digital marketing wave.

Business Plan

There are many facets of several operations involved in a business as there are many stakeholders involved in it with which multiple rounds of negotiations happen.

Thus, not everything is perfect in a business and its model, especially in small businesses. This is where an external consulting firm can be consulted for their experts to identify loopholes in your business model. After which these experts will recommend changes based on the loopholes to cut operational costs and boost profits.

The business plan should be such that it shall stand the test of time and beat all the rough weather for the volatile business environment. You also need to bring your workforce together and inform them of the changes you plan to do in your business strategy and seek feedback from them.

Loan Assistance

There are many options in a developed economy like the UK for taking business loans by these small business owners. There are many lending programs run by the UK government to support innovative start-ups and small businesses.

There are government-backed business loans, commercial banks business loans like NatWest Small Business Loan, HSBC Business Loan, Lloyds Bank Small Business Loans etc. Then there are alternative finance companies like Boost Capital, Virgin Group, and many others.

Your business can get an unsecured business loan from a direct lender at a higher interest rate, secured business loan from a commercial bank at low-interest rates, moratorium based business loan via government-run schemes. In a nutshell, there are many borrowing options, if you have the capability of repayment. You can compare different lenders based on their quotes and choose the lender giving the best deal with a flexible repayment plan based on your business’s cash flows.

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