Moving to the ‘new normal’ and beyond (Part 3)
In the final part of this series for London Accountant, David Lewis considers the owner’s perspective when navigating the current crisis.
My previous article talked about managing a business through uncertainty, including stepping back and looking at the big picture. Looking beyond the business itself, what about the owner’s perspective?
The impact of Covid-19
Most businesses have been affected by Covid-19:
- Some will have done well and taken advantage of opportunities– Zoom is an example.
- Others will survive but may need to adapt to the “new normal”. They may need capital to take advantage of opportunities.
- Some will be damaged and will survive, but the opportunities for complete recovery may be more limited.
- And there will be those that are unlikely to survive
Owners will have different agendas:
- Some will be heavily financially driven. Perhaps they are looking to take the business ‘so far’ and then sell it on.
- Others may view the business as their life’s work. Some of them may not be keen to let go.
- For others impending retirement or health issues, may mean that they want to exit in the not too distant future.
- Loyalty to staff and the desire to preserve jobs, may or may not be an influence.
The impact of lockdown and Covid-19 may have changed the mindset of some owners. Some may feel energised by new opportunities while others may feel battered or would like to change their work/life balance.
Looking at the horizon (or the elephant in the room?)
It may be worth asking some tricky but important questions:
- Is it reasonable to believe that the business will survive?
- How concerned is the owner about the ability to preserve jobs in the business?
- What are the owner’s personal objectives and attitude to risk?
- Do they still have the drive and energy to take the business forward?
- Will the business need investment?
Choices available will clearly vary according to circumstances. They may include:
- The owner continuing with the business ‘as is’
- The owner stepping back and promoting or bringing in someone to take over the reigns
- Taking on equity investment
- An exit
- Consulting an insolvency practitioner
While some of these choices may be difficult to digest, coming to terms sooner rather than later usually will often be best course of action:
- While it can be really difficult for directors to accept that they need to consult an insolvency practitioner – prompt action should increase the chances of the business’s survival.
- Taking on investment, merger or a business sale, are all likely to take time and may be challenging. Planning ahead should improve the chances of a successful outcome. The article Keeping your business sale on track provides further information. The impact of Covid-19 adds extra dimensions to major transactions which you can read about in the article Doing deals in 20/21- a due diligence perspective.
David Lewis provides due diligence and financial project support through Camrose Consulting Limited. Projects can be delivered direct to clients or on a subcontract basis via their accountants.
This article is for general information and interest and may not be comprehensive. Specific circumstances will also vary. We do not accept responsibility for any loss arising from any person or organisation acting or refraining from acting based on information contained herein.