Time to take stock of your business

Tip of the week: It is time for independent practitioners to take stock of their private business. Vanessa Sanders maps out some big issues for consideration

The Prime Minister has signalled huge uncertainty continuing as businesses now consider the long road to recovery. It is unlikely that the workplace will ever look like it did at the start of the year and we all need to acknowledge this fact before we start to think about what will be the ‘new normal’ for each business. 

Following the reactionary phase, when everyone was sent home to work who could be and those who had to continue were forced into emergency mode, we must move into the pause and re-charge mode.

We need to think about how we will shape up to new challenges to keep business up and running, if indeed that is the decision we make, for some will decide not to continue. 

This need to invest in the longer-term resilience of our ways of conducting business raises many pertinent questions around flexibility, adaptability and heightened vulnerability. 

Innovation is key

The pandemic – and our sudden reliance on working remotely, considering quickly how to meet the needs of our customers, our staff and our own supply chains using technology – has placed business under unprecedented stress. As a result, we are increasingly exposed to disruption and attack from areas never previously considered and we must review our resilience.

Innovation will be key to building resilience capacity. Innovation in terms of how we communicate with our customers and our staff, not just in terms of investment in a few bits of improved technology. 

Responsibilities and accountability will alter significantly in an environment which has been placed on hold but will need to return to some form of activity – and soon.

Consultants run micro-businesses. Many are one-person operations reliant upon physical communication with patients and manually operated processes with little or no direction, reacting to circumstance – and because consultants are relatively well-rewarded for their efforts, this has been sufficient to keep the work flowing. Some of this at least, will need to change. 

Cash flow problems

Without financial resilience, operational and commercial resilience cannot be maintained. This lockdown period will have presented acute cash flow pressures for most businesses as activity levels fell off, so reviewing how to consolidate reserves for the future requires businesses to adapt their existing financial structure to an increasingly volatile environment. 

As circumstances are bound to become more hostile in future as income sources are less free-flowing and costs increase to compensate – including, no doubt, taxes – the need to access and maintain liquidity becomes of paramount importance, hence critical cash flow risk management decisions should be put in place now.

While Covid-19 has been a shock, it will have highlighted vast vulnerability and the re-start phase will present even more of a challenge. 

Mobilising to stimulate revenue growth in a vastly different trading environment will place enormous pressure on working capital and direct revenues. 

Decisions on how and when and perhaps even if work is to be restarted should not be taken lightly. Economics informs us more businesses fail emerging from a downturn than going into or during it.

Vanessa Sanders (right) is a partner with Stanbridge Associates specialist medical accountants