by Rebecca Trudgett & Sebastian Elwell
The economic storm has greatly impacted the businesses of our clients. As professional advisers, we want to help, but how? Our clients are the skippers of their business, and we as professional advisers are their crew. As every sailor knows, when you are trying to ride out heavy weather, we need all the crew to be onboard, clipped in and working together. We need to put the plan back together and work out a way how to survive, recover our course and ultimately reach safe harbour.
Our number 1 priority right now is making our clients’ businesses “seaworthy.”
While state support will gradually reduce and the economy must be revived, capacity will not come back online all at once. Financial planners, accounts, legal and HR advisers each have our part in this. We must work together to help our clients create business recovery plans. It’s our job to stop our clients’ businesses from failing as best we can, and a business recovery plan can significantly aid in this.
Business Recovery Plans
Before even beginning to create the business recovery plan, we must close the disconnect. This means working together more effectively to combine your expertise with that of your clients’ respective teams. It has never been more important to create and connect with a team of people who can help at this time. Together, you can come up with a far better plan.
Next, we need to help our clients think of ways to innovate their businesses. They might need to invent entirely product lines and revenue streams to remain viable. They may need to re-engineer entirely, using what they already have to produce something completely different. One example local to me is the Gin producer ‘Silent Pool’ switching to the production of hand sanitizer.
We’ll need to help our clients adapt their businesses and the way they work. An example of this would be replacing traditional face to face meetings with video calls.
Businesses might also have to broaden their product or service offering. For example, a café who broadens their offering from purely cabinet food and coffee to include new readymade meals, boxed sweet treats, to selling wholesale ingredients and even ingredient bundles with recipes for making their signature dishes.
Remind clients that their personal budget is important too. Their business is there to serve them, not vice versa. Financial Planners have the skills and technology to support business owners reviewing their personal budgets. Every pound saved is one less that needs to be extracted from the business, making it more efficient and more likely to survive. Accountants will appreciate support with this and a truly collaborative approach.
That said, revising the business budget is important too. This should be a bottom up process, starting with the increase/decrease in cash and working logically through all aspects of the balance sheet.
Help your clients work out what they need to measure. Real-time data and digital reports of the business numbers are key. Most businesses fail through cashflow and without real-time information, planning decisions about bringing staff back from furlough will be made much harder. Interactive cashflow modeling can be extremely useful here as it can show how a plan is performing in real time. Get to know your Xero experts, and if you haven’t modernised your accounting systems yet, it must be number 1 on the priority list.
Help your clients identify their business vulnerabilities and critical challenges. By naming them, you can overcome them. Create a risk register and use the governance function of the company to review it. This applies as much to 1 man band businesses as it does to larger corporates.
Lastly, help your clients identify their key opportunities – keep the list short and start working on it straight away.
At the end of this process you will need to bring all of these considerations together into a cohesive plan, with actions and responsibilities. The Skipper will need their Accountant as their first mate, make sure you have a good working relationship with the accountant and support them where you can help as part of an overall plan. It is likely to be the quickest way to get their financial plans back on course.
Rebecca Trudgett FCA is the Founder and Director of Switchfoot Accounting Limited. More than an accountant, Rebecca is a coach and mentor to business owners. She creates holistic business plans to help owners meet their planning objectives.
Sebastian specialises in providing joined-up advice across the professions. As an Independent Chartered Financial Planner, a Fellow of the Personal Finance Society, Affiliate member of STEP and a member of SOLLA he has worked with accountancy and legal professions to advise vulnerable clients for 15 years.
To find out more about how cashflow planning can assist deputies and attorneys to inform their clients and allow the best decisions to be made in light of capacity, you can always contact my team and me at Switchfoot Wealth.
The views expressed in this article are that of this author and do not necessarily reflect the views and opinions of Voyant.
