How to prepare for v-shaped recovery

Johnson Reed
3m read

According to recent reports, such as those from Bank of England economist Andy Haldane, the UK could recover quicker than expected, with a v-shaped economic recovery.

In a v-shaped economic recovery, the economy suffers a sharp, but short-lived period of economic contraction, such as that experienced in the last 3 months, as exemplified by new figures showing how the UK economy shrank more than first thought between January and March, contracting 2.2% in the joint largest fall since 1979.

This is followed by a quick return to pre-crisis levels of growth.

Although there are continuing risks of unemployment with the furlough scheme ending at the end of October, an increase in household spending could restore the economy to its previous position.

Whatever the outcome of the next few months, it is important that small and medium enterprise businesses prepare themselves to ensure long-term survival and success.

How can I prepare my business?

Depending on your business sector or industry this could mean an increase in demand, sales or orders. As a business owner, you should prepare for this responsibly, ensuring you have the facilities and stock to cope with demands, as it may offer your business a much needed boost after times of challenging hardship for a lot of sectors in the UK.

For businesses that are eligible, the CBIL scheme is still available to offer finance facilities backed by the government to offer support for small businesses during the pandemic. However, with or without this scheme it is essential that businesses keep cash flow as strong as possible and invest in coping with an increased demand, whilst keeping costs low and a healthy balance.

Cash Flow

Firstly, it is important to create a strong cash flow forecast, that includes income such as sales, loans, government funding and any other sort of investment into the business, as well as future projections for such figures. This is to be followed by expenditure such as supplies, equipment costs, staff wages, business bills such as rent and tax, and predict this as accurate as possible by planning a budget, to ensure you know what is coming and going. For advice on how to improve your cash flow see our support post here.

Lease It

The old saying ‘cash is king’ never gets old, and you’re going to hear it a lot more in the coming months. We preach this to businesses because it allows you to have the latest equipment through financing assets, whether that is gym equipment, catering equipment, It equipment, frying equipment or hard assets. By using equipment finance, leasing and using asset finance, you can keep money in the business, maximise your tax position, trade to a high standard and keep a healthy cash flow and balance without having to sacrifice a large expenditure at any given time.

Live within your means

By managing expectations realistically and planning for a gradual increase in trade whilst managing expenditure effectively, you can start to grow your business as the economy grows, this means planning cash flow, taking leasing options where possible and starting at a reduced level compared to pre-crisis and planning for a rainy day whilst still trading and providing your customers with a good service to ensure that if any subsequent economic crises are ahead your business is in a place to withstand it.

We’re happy to speak to any business about their finance needs, whether that be upgrading equipment, replacing equipment or purchasing brand new equipment, these options are second nature to us and always represent the sensible option for helping your business to grow.

For further information please visit our website, email or call 0161 429 6949 our team for a no obligation chat.