In recent months, the landscape for business has changed almost beyond recognition. Short term, signs are hopeful that trading can resume as ‘normally’ possible very soon while it is safe to do so. However, franchises should also be considering the longer-term consequences of working within a brave new world where social distancing has become part of everyday life.
The long-term effects of COVID-19 will impact on how many franchises can do business for the foreseeable future. They will have to limit the numbers of customers they can serve while observing Government guidelines on social distancing for example. If they cannot work from home, staff will need more room and more time to complete everyday tasks. Time will also need to be devoted to disinfecting premises and equipment. Personal protective equipment may need to be provided for staff too, all adding to the overall cost base.
Will franchises see a reduction in sales moving forwards as customers are less willing to engage in the activities they did previously? Will they simply not be able to get the same footfall through the business due to the measures which need to be put in place? For each franchise, the outcome will be very individual but there is one certainty: planning ahead is key for economic survival.
For support, many franchises have needed to take advantage of the loan schemes available: the Coronavirus Business Interruption Loan Scheme (CBILS) and the more recently announced Bounce Back loan scheme or some have just needed to extend overdrafts. But these loans will need to be repaid in the future and anticipating and planning for this is important.
Richard Holden, head of franchising at Lloyds Banking Group explains: “Any business owner needs to look carefully at their forecast and cash flow moving forwards. Do get advice from organisations and accountants like d&t who help with business planning and forecasting, to ensure the loan repayments are realistic when it’s time to repay them.
“Franchises should limit their applications only to loans that they are likely to need and ensure they can afford that commitment. If more financial support is needed in the future, a further loan can be applied for. In 12 months’ time, businesses will need to start to repay CBILS or Bounce Back loans, so think seriously about your trading outlook and ensure that commitment can be serviced.
“For franchises looking to borrow more than £50K CBILS requires affordability checks. Your business will need to be able to prove it was viable before the Coronavirus hit. The Bounce Back loan offers support for businesses who need less than £50K. The online Bounce Back application is swift and checks are limited. Businesses can apply for CBILS or the Bounce Back scheme but not both, so again if you are unsure what’s best, seek advice. The good news is that all loan applications are being processed swiftly.
“Our economy will undoubtedly feel the impact of this global health crisis for many years to come. As business owners, being aware of this and keeping lines of communication open with banks and business advisors will ensure you can get help if and when needed.”
Through no fault of their own, many franchises have already or now need to access financial support to secure a future for themselves and their employees. However, the best business decisions are undoubtedly based on a sound evaluation of the numbers and solid business planning for the future.
At d&t our friendly and approachable accountancy and business planning experts are on hand to offer advice and assistance about tackling the future with confidence, based on analysis of the facts and figures which enable detailed forecasting. We add value to the numbers and work with hundreds of franchise organisations to help them proactively navigate through both the good and not so good times.
Talk is cheap! Compare this with the consequences of making the wrong financial decision. Discussing your particular franchise situation with an expert could make all the difference between success and struggle.
For those unsure where to turn to for help, please visit our website which has become a plain English hub for all things Corona support related. www.team-dt.com or give one of our friendly advisors a call. It’s good to talk.
