Hundreds of thousands of businesses applied to UK banks last week to access bounce back loans to navigate through the current economic storm but with Aberdeen literally on the brink of recovery from the last oil crash, Covid-19 and another beating of Brent crude is set to further test the resilience of the city.
But is it simply a case of the strongest is the fittest or will Aberdeen’s relentless survive and thrive attitude once again beat the odds?
There is no doubt that most businesses will suffer in some manner right now and also into the future. Many are accessing the vast government support on offer, whilst others have fallen through the cracks, and some are having to quickly reinvent themselves to create a new route to market.
Managing partner at SBP Accountants and Tax Advisors, John Hannah, and his team have been working closely with their 4,000 plus client base to help them weather the storm and access the government support on offer.
Headquartered in Aberdeen’s Queen’s Road, with offices in Peterhead, Fraserburgh and Banff, SBP works with north-east businesses, ranging from sole traders to corporate businesses, and so far around 70% of their clients have applied to access Coronavirus support.
Mr Hannah, who has grown the business significantly since becoming managing partner and overcome a number of adversities along the way, said: “The percentage of clients that we have seeking support is only a snapshot of the number of businesses struggling to keep their head above water at the moment across the north east, but we must also bear in mind that there are a number of businesses and entrepreneurs that are not eligible for any support and have effectively fallen through the cracks, so this paints an even more grim picture for some.
“The business arena in the city is going to be a very different place when we come out of this situation but Aberdeen has travelled through many markets ups and downs in the past and we have proven that we are a city of entrepreneurs not frightened of adversity and with an ability to adapt and evolve with the market changes.”
If they haven’t done so already, all businesses need to look at the support that is available, including the job retention scheme (furlough), bounce back loans, CBIL loans (Coronavirus Business Interruption Loan), and grants for rates relief etc.
In addition, now is a time to really look at financial controls, manage ageing debt, focus on cashflow rather than profit as over the coming months businesses just need to try to remain solvent. This is not the time for growth, businesses must get into survival mode and it goes back to the age old saying ‘cash is king’.
Businesses should be thinking about their assets and what they can do to generate revenue, what stock do they have to sell, what services or assets do you have that other businesses need?
Mr Hannah continued: “Entrepreneurs and business leaders have to be visionaries at times like these and perhaps many now have extra time to re-evaluate their business and make changes which will see them through the next few months but also evolve their future offering.
“One of the key factors of survival and resilience for me has been keeping the right team around me, adapting and evolving with ever changing times, investing where I can to improve technology, and managing the business controls.”
Many businesses in Aberdeen have already diversified, such as restaurants trading as takeaways, cleaning firms sourcing and supplying PPE equipment, IT companies setting up home working, alcohol manufacturers developing hand sanitisers, so there is a sense of ‘where there is a will there is a way’.
However, cashflow will kill a lot of good, small businesses and recent reports suggest a fifth of small businesses in the UK are at risk of collapse, though on a positive note, this will create new client opportunities for those lucky enough to come out the other end.
More good may also come from the situation. There may be in increase in franchise opportunities given the increase in online sales, property prices may fall giving first time buyers a foot onto the ladder and creating opportunities for property developers, home working could rise and boost morale, motivation and productivity, the stock market is low so it is a great time to invest, and luxury goods like antiques, art and gold do well in recessions.
So, how we all weather the storm may leave us all in different ports and after the storm there is usually a rainbow but it is crucial for business leaders and entrepreneurs to use this time to seek out the best advice and work with their accountants and other business advisers to reach calmer waters.
SBP, which has 40 employees and five partners, offers a variety of tailored business and accountancy services, including personal and business taxation, as well as a dedicated business services department to cover everything including bookkeeping, VAT and payroll requirements.