Staying afloat – why communication is key during COVID-19

Staying afloat – why communication is key during COVID-19

A third national lockdown has put further pressure on cash flow and it could take the economy even longer than thought to bounce back.

However, now is not the time for businesses to give up. Directors and owners should be planning how best to face the future, and communication remains a vital part of any survival plan.

Here we explain the top tips on how communication can be used to make it through a third lockdown.

1. Don’t be afraid to talk

Most businesses are being hit by the same challenges. As a result, there should be a level of mutual understanding between fellow directors, creditors, customers and suppliers.

More than ever, organisations must work together to adapt to this changing environment. Negotiation could be an effective way forward, especially regarding contracts with suppliers, as it can create solutions that benefit all involved.

Of course, negotiations might not always be simple. For example, HMRC can be the most challenging of those stakeholders to a struggling business and any concessions now available in the form of VAT deferral or time to pay will be closely monitored against the risk of potential abuse.

2. Support other businesses

Communicating with stakeholders could pinpoint competitors that are having difficulties. COVID-19 has impacted every business in different ways, and in turn has created opportunities for support. By having regular meetings with fellow directors, companies can discuss finances and identify any issues that need to be addressed. However, it is essential to document any decisions that are made as a result.

3. Diversify your client base and products/services

In a recession, it’s inevitable that one or more of a business’ clients will leave – unfortunately, most likely due to financial hardship. As a business’ best source of income is a strong client base, it is crucial to diversify this as much as possible. Therefore, directors and owners should begin talks with other companies to assess whether new client relationships can be created.

Assessing the products and services offered can also lead to new areas of business being identified that are perhaps less vulnerable to recession. This type of diversification, as well as diversifying a client base, can help to soften the blow considerably.

4. Seek professional guidance

Seeking advice from solicitors, accountants and insolvency practitioners at an early stage is always wise. Advisers can help to assess business decisions, recognise the warning signs of insolvency, and recommend solutions to any financial difficulties, including signposting the resources available. If appropriate, advisers can also assist with negotiations around payment holidays with key suppliers.

Looking to the future

COVID-19 has the potential to cause long-lasting damage to supply chains and businesses, with economic recovery likely to be slow. To regain some stability in this uncertain time, organisations must communicate with all key individuals effectively, to ensure support can be given and received where possible.

For guidance and advice around the solutions available if you’re experiencing financial difficulties, contact a member of our insolvency and restructuring team.

We have launched our guide to recovery and resilience, helping to support businesses and individuals unlock their potential, navigate their way out of lockdown and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.