Posted June 11, 2020

Financial Planning For Your Post Lockdown Business

With the first non-essential retail premises beginning to reopen and the initial panic has passed, it’s time for businesses to look at their situation and begin to plan for the future and what the “new normal” might look like for them. One of the main drivers of business success is financial planning and preparing for the future.  Now more than ever, if your business is going to survive the current crisis, having a good understanding of your cash flow and a plan for the months and years ahead is vital.

Business Financial Planning

Financial Planning For Your Business Is Essential


For a lot of businesses, the start of lockdown meant the temporary closure of their business, it became essential to ensure that they had the cash within the business to continue in the short term.  Now, as we start to exit lockdown, the reserves that businesses had 10 weeks ago are running low. It is vital that the businesses have the working capital to trade in the new post lockdown landscape.

The lockdown period has given a lot of business owners the space to consider where they want to take their business and how the business might look in the next six, nine or even 12 months.  For other businesses it has given them an opportunity to try new markets, or to pivot their business and try something totally different.  However, it is vital that these businesses in particular ensure that they have a financial plan in place for the coming months as it is very easy to overtrade and run out of cash or to become too reliant on the government support which will be reduced over the coming weeks and months.

Life without Governments Schemes

The government has provided a huge number of schemes to businesses to see them through the lockdown, the furlough scheme, rates grants, deferral of tax payments, and various loan schemes (see our COIVD hub for eligibility and further information).

Whilst this support has been very welcome and many businesses will have survived because of it, businesses must now prepare for the support to be reduced. When looking at your financial plan, it is important to consider this as well as the uncertainty we face with customer confidence and demand.

Borrowing money to invest is fine but borrowing to fund day-to-day expenses can leave you exposed in the future if you haven’t properly planned for the repayments.

Financial Planning for a Change in Demand

The world has changed so dramatically in the past three months. With that change, every business will have experienced a change in the demand for their products.

How can businesses adapt to these big swings in demand and is it possible to anticipate them?

The best way to anticipate changes in demand is to talk to your customers. Use the current situation to get back in touch with previous customers, target new customers and build the business you really want.

If demand for one product has increased substantially, is this a long-term increase – should you invest in this area of the business or is it a temporary change?

If demand has fallen, is this a product that will be wanted in the future, can you adapt your product easily to create demand now? What can you do to keep cash coming into the business?

Financial Planning, Where to Start?

When looking at a financial plan you need to make sure that the foundations are right.  We would advise that you start by making sure that your bank is reconciled and up to date and that you have agreed the balance to the statement to the balance in the software.

Once you are on top of your numbers you should look at reconciling your bank transactions regularly. Also use apps such as Hubdoc and AutoEntry alongside to ensure you are keeping on top of maintaining your financial records.

You shouldn’t just do your accounts for HMRC, you should prepare them for yourself.  If you are reconciling your accounts weekly, use the information to make business decisions, regularly reviewing and understanding the numbers could mean you avoid making costly financial decisions.

Using your financial data will help you make the right key business decisions at the right time.  You can look at what department or product is making or costing the business money, whether a particular advertising campaign paid off or whether you have the cash in the bank to pay the VAT next month.  Not looking at the numbers will probably mean you don’t know if you will run out of cash until it’s too late to get the most cost effective finance – this might just be collecting in your debtors a little quicker.

Ask An Expert

If you are struggling to understand your business’ finance and you aren’t sure about the next steps in financial planning, now is a great time to ask an expert – an advisor or accountant who does this every day for their clients.

What if you’ve spoken to your advisor and things still aren’t making sense?

If your advisor cannot explain things to you in a way that you understand. It is probably time to look for another adviser as finance doesn’t have to be complicated.  A good accountant should be able to help you understand your business’ finances in a way that you understand them.

The most important thing to remember is that to run a successful business post lockdown, you need to understand your current situation and consider the obstacles in the way. Having a plan will help you navigate your way around them.