There’s no denying the fact that coronavirus is shaking up the world. Unfortunately, it’s starting to seriously affect businesses in the United Kingdom.
The virus has spread quickly across the world since its outbreak in China, and the UK is starting to feel the fallout from what’s now been termed a pandemic by the World Health Organisation.
While the UK hasn’t yet seen as many cases as the rest of Europe and isn’t yet in lockdown, that could quickly change, especially as the UK isn’t testing everybody displaying symptoms so is unlikely to have an accurate number. Nevertheless, a virus of this magnitude hasn’t been seen before by the modern economy.
Already, major companies are collapsing with Flybe being the most notable, while small and large businesses alike are suffering and feeling the strain. People are starting to stop using services and buying non-essential items, and the economy is taking a huge hit.
In the wake of the trying times brought about by the spread of coronavirus, Irwin Insolvency is taking a detailed look at what coronavirus might mean for businesses in the UK.
What Does Coronavirus Mean for Businesses in the UK?
Coronavirus is an external threat, the like of which UK businesses haven’t seen for many decades. In fact, nothing in modern memory really compares to not only the swift advance of the virus across the world, but the level at which the world economy has been faltering.
On a basic level, people are wary of travelling. In Europe, entire cities are on lockdown, and in the UK the economy is feeling the effects.
People are self-quarantining themselves at home, they aren’t going out as much, and they aren’t using services or even buying certain products. While the travel industry is the most obviously hit of UK industries, everyone from freelancers to CEOs are starting to feel the pressure.
Simply put, coronavirus is causing a slump in sales and a lack of turnover. Businesses are losing staff to illness and quarantine, and having to pay huge sick bills in the process. Profits are down and growth has all but halted since the virus broke out of China in the New Year.
For UK businesses, this means that they need to be prepared for things to get worse, at least in the short term. But prepare thoroughly, identify the areas of a business that are most at threat, and instigate a plan of action to mitigate those threats, and businesses will be able to ride out the worst of the coronavirus pandemic.
How Serious Is Coronavirus for Business?
The short answer to this question is very serious. The virus is looking likely to be more deadly to the UK economy than it is to people. Experts are predicting a new financial crash, as people lose faith, companies lose value and the stock markets plummet.
The seriousness of the crisis shouldn’t be doubted. There have already been some major casualties. The first was Flybe, the beloved regional air carrier that has operated routes across the UK and Europe for decades. And more are set to follow.
Many companies will have to lay off staff, with small businesses not offering as many hours, and larger businesses such as Norwegian Air laying off hundreds. The travel industry has been hit hard, but as this is such a huge part of the economy, it’s already having a knock-on effect in other industries.
Laid-off staff will have less disposable income, and with growth in the economy stalling there will be fewer new jobs for them to find. Unemployment will go up, and businesses will suffer.
Businesses will have to foot large sick bills too, as their staff are forced to self-quarantine and take time off work. That means that while making fewer profits, costs are going up exponentially, and with fewer staff at work, productivity is going down.
Coronavirus is proving, rapidly, to be a serious external threat to UK businesses, and they need to act now to make sure they don’t suffer even more.
Will UK Businesses Collapse?
With such a serious external threat to the economy, it’s very unlikely that Flybe will be the only UK company to collapse.
In fact, it’s likely that there will be more casualties of coronavirus in the British economy. Flybe, a well-respected and well-known British airline, was struggling with low sales and high competition, as well as ever-increasing running costs. That was before coronavirus had even made the jump to humans in China.
The spread of the virus hit the travel industry first and led to a huge reduction in seat sales. Unfortunately for Flybe, that was enough to send it over the edge and the business collapsed.
Other UK businesses could quite easily follow Flybe, as reduced sales across different industries can feasibly lead to a similar outcome. At first, coronavirus will hit struggling businesses hardest, the same way it led to the collapse of Flybe.
If the virus continues to wreak havoc indefinitely however, businesses that seem to be fine and to be making headway will be the next to collapse, causing a knock-on effect and a huge economic downturn.
What Is the Government Doing to Help UK Businesses?
The UK Government is urging employees to self-quarantine and is looking out for the interests of public health. The government also understands the effects that the crisis is having and will have on the economy. For that reason, it is taking measures to help businesses across the UK survive this unprecedented external threat.
Remember though, that the government can only do so little or will only do so little to help, so businesses need to have their own robust contingency plans ready to be spring into action if things continue to worsen.
The government announced new levels of business support in its latest budget aimed primarily at helping smaller businesses bear the burden of costs associated with coronavirus. Many small businesses will be able to claim back sick pay from the government, allowing employees to self-isolate if they have symptoms of the virus.
There are also government plans to release low-cost loans to struggling businesses during the coronavirus outbreak, with the majority of losses being taken on by the government in this scheme, in order to give financial support at as low a cost as possible to businesses.
As always though, individual businesses need to be aware of what help they can get from the government, and keep up to date on government communications during the outbreak. Read the news and keep watching the official government websites for information, as things will inevitably change as the virus progresses.
What Can Businesses Do to Protect Themselves?
Unfortunately, despite government efforts, it’s going to come down to individual businesses in the UK to protect themselves and each other from coronavirus.
That’s where our experts at Irwin Insolvency can help. We know how to help companies mitigate the dangers faced by external threats. While coronavirus is certainly a novel threat, there are still many precautions that businesses set up ready to be implemented quickly.
The exact actions that can be taken will depend on the line of work a business is in. Where possible, companies can set up remote working opportunities. This means allowing workers to work from home. This stops the spread of the virus around your office and community, but keeps up productivity. Instead of holding n-person meetings, have video conferences and talk remotely.
Businesses are also helping each other out, by delaying loan repayments or organising extensions on leases to offset the lack of sales, knowing full well that business and profits will pick up again once the worst of the virus is over.
There are many things to consider though from payroll to sick leave, and how to manage staff numbers if business is down. Insurance, investments and financing all need to be looked at too. That’s a lot of extra work in an already trying time for businesses across the United Kingdom.
Most importantly though, UK businesses, regardless of their given industry, need to be undergoing an external threat review. Before any changes can be implemented, you need to know what exactly is going to be the biggest threat to business during coronavirus. Then you can start analysing the best methods to fight it.
While Flybe was the first major company to fall, many smaller businesses have fallen without much acknowledgement, while countless more are struggling to make ends meet in this unexpected downturn. It’s smaller businesses that will be hit hardest, as large companies and corporations are better prepared, with more resources to weather a threat such as coronavirus.
Here at Irwin Insolvency we’re experts in helping UK businesses protect themselves from external threats. We can help your businesses to undertake thorough reviews and make important contingency plans.
Coronavirus is one of the biggest external threats to UK businesses that we’ve seen in decades, and it will pay to be prepared. Contact Irwin Insolvency today to find out how our experts can help you to survive the virus.