The key resolution for business is to have a clear plan. Many businesses were forced to be reactive in 2020 and, while the road ahead will still contain changes as the Covid-19 restrictions ease, it is essential to have a clear plan and forecast for 2021.
Cashflow forecasting will remain vitally important for many businesses who exhausted their reserves in 2020 and are simply surviving. Ensuring forecasts include the impact of the Brexit deal, deferred tax liabilities from 2020 and current support measures ceasing in spring 2021 is critical for businesses.
Government can play their part by providing medium- to long-term support and guidance as part of their fiscal policy.
A major criticism of the Government in 2020 was that too often the measures introduced were short term and constantly changing. The Government needs to provide a stable economic environment in which business can operate and then stimulate investment and growth.
This can be by Government alone or by encouraging investment in UK business from the private sector. Also, the level of debt taken on by businesses in 2020 needs to be addressed in order that future growth can be shared equitably between the Government, business owners and work force.
As 2020 thankfully draws to a close, our attention now turns to 2021. With a deal on Brexit finally done and vaccinations against Covid-19 accelerating, the outlook is much brighter, and we take the opportunity to look at what businesses and Government should consider as part of their New Year resolutions when 2021 dawns:
- Review their business plans and forecasts. Stress test assumptions as to when lockdowns will end, and contingencies might be needed
- Make sure all previous tax deferrals and payment holidays are captured in financial forecasts. With furlough extended and applications still able to be made for Government-supported bank funding, make sure all these are utilised where appropriate
- Take time to reinvigorate your culture and values as a business. 2020 was tough for many but as workforces come back together make sure they are fully inclusive
- Retail sales methods have changed. Embrace multiple methods of distribution including bricks and mortar, online and third-party marketplaces
- Use social media to connect with customers and build brand experience
- Those with premises should work with landlords to agree a rental model that is fair to both parties
- Embrace and invest in agile working to maximise output from your workforce
- Review supply chains to become more flexible. Have the ability to switch suppliers if needed as there is still some uncertainty ahead
- If you can pay suppliers including landlords, then pay. Treat all your suppliers with respect. Confidence in your own business will then grow
- Build on the solutions found in 2020 – have you found a new, better way of doing business? Don’t just revert to old habits
- Be proactive and look to the future. Many measures in 2020 were reactive and did not provide the business community with certainty for the future to make strategic decisions
- Consider now what the end of the furlough scheme looks like and tell business owners – will it be phased out, sector-specific, or based on which Covid tier you are in?
- Acknowledge that there are gaps in the support. Reconsider measures to provide assistance to the three million workers who were ineligible for support in 2020 to avoid a large, disenfranchised community
- Provide news on the successor loan scheme. Many businesses took on large amounts of debt to survive. Greater debt is not the answer but an investment scheme for the private sector and Government to share in future success would be an equitable solution
- Provide clarity on business rates. Many businesses, including those most impacted by Covid-19 in retail, hospitality and leisure, face a rates bill from April 2021. Further targeted assistance is clearly needed and must be advised early in 2021
- Incentivise investment from the private sector. Provide increased relief under the EIS/SEIS schemes or widen the net of companies that are eligible to receive this investment
- Be imaginative and allow businesses to surrender their losses for a cash payment now. This will be recovered as the company becomes profitable, as it will start to pay tax sooner as it comes back into profit
- Continue to create funds and work with local authorities and businesses to repurpose town centres
- Invest in training for technical colleges to develop courses that meet the needs of industries now, throughout the country to redeploy youth into skilled jobs with a long-term future
- Ensure the large commitments made to infrastructure become a reality and get the simple projects underway as soon as possible. Post Brexit, ensure that UK SMEs and genuine UK companies are the majority of contractors
2020 was an unprecedented year for both businesses and Government. Many of the changes, including the manner and location of where we work and shop, will form part of our society going forward. However, the financial damage caused will take time to heal and it is important that business and Government work together to rebalance the UK budget and reduce the deficit caused.
Fiscal and investment decisions by Government need to reflect the long-term solutions required to reduce this deficit. Ensure social gaps are not widened, resulting in an inclusive society and maximising the potential of everyone in the UK.