Adapting to coronavirus – investing to come back stronger

As lockdown measures are further eased, many businesses across the UK are starting to open up again for the first time. But even for businesses that have remained open throughout the whole of the pandemic, adapting to coronavirus hasn’t been easy. 

Cambridge Rapid, a metal manufacturing business in West Suffolk, has been continuing its operations throughout lockdown, but has had to make rapid changes to keep pace with the changing business landscape. We caught up with Esther Cornell, Managing Director, to learn more about how she’s adapted her business, and how she’s using her Funding Circle CBILS loan to make her business even more competitive.

Adapting your business in the coronavirus pandemic

What did your business do before coronavirus?

Cambridge Rapid is a complete manufacturing service. We manufacture sheet metal work and assemblies for all industries.

How has the coronavirus affected your business?

Coronavirus had quite a big impact on us, especially as we’d only just relocated 12 months ago. There was a settling down period after relocation and we’d had quite a challenging 9 months getting settled. Then coronavirus hit. We lost some staff through self-isolation quite early on and, in the first 6 weeks of lockdown, we also crafted medical equipment. As time continued, our orders dropped quite considerably. In May, we had just 60% of our normal orders coming in, and by June it was down to about 35%.

How have you adapted?

We had to review all of our costs. We did furlough some staff during May — those that were non-essential non-production staff. In June, we even had to furlough some of our production staff, but we wanted to be able to train our workforce, at the same time as furloughing, within HMRC’s guidelines. To achieve this, we’ve actually set up a training school in-house to train some of our younger employees, as well as some of our older ones, to make sure we could be more competitive when the markets improve. We took the opportunity to do something we wouldn’t have had time or funding for normally.

How are you operating now?

We are doing our own sales and marketing. With my job in particular, now we have funding, I’m able to re-focus from managing cash flow to how we market ourselves. With our strides in training, this means we can make people more aware of how competitive we are, and hopefully build back our order book.

How have you supported staff and customers?

Because we’ve worked all the way through the crisis, we had to put controls in place straight away to allow us to continue working. Fortunately, it’s easier to implement social distancing in a large factory environment, and ensuring we follow those guidelines has been very important. 

In the early days of lockdown, we also had to allow time off for shopping, because we were very aware of all the food shortages in supermarkets at the time. As lockdown measures continue to be eased, our renewed focus is on training and supporting our staff, and using this opportunity to better ourselves and our processes.

Using a CBILS loan to fund your business

What do you plan on doing with your CBILS loan?

We’re keeping some of it as a safety net. We’ve also used some of it for working capital, and we’ve invested in our staff with our training programme. We’ve also used it to further our sales and marketing. It’s primarily being used to help us improve the business so that we can grow from this and become much stronger within the marketplace.

How was your Funding Circle experience?

It took us under half an hour to apply online. It was very simple and straightforward — we sent all the information through, got a decision in 24 hours and the money was in our bank account 48 hours after that. We couldn’t believe how easy the process was, and the fact that we won’t have to pay anything for the next year has been a huge weight off our minds. It gives us the flexibility to focus on what we need to and to get the business in tip-top shape.

What advice would you give to business owners considering funding?

Obviously everyone needs working capital, and obviously there are significant issues with cash flow at times like this. For us, our Funding Circle CBILS loan is great because we won’t have to repay anything for the first year, and if you can manage to pay it back by the first year, it won’t have cost you anything. That makes it so flexible, and means that you don’t have to use it unless you need to, but you’ve also got the ability to trade at a normal level even when your order numbers have been dropping. 

Support from the business community

How has your community pulled together?

We’re part of West Suffolk Manufacturing Group, so our local Economic Support Officer contacted us within a week of lockdown to offer their support, which was really helpful. We also recently met as a group since lockdown restrictions have eased, to discuss what we were doing, to see how others in the group had adapted and see how we could work together. We’ve been very lucky being in West Suffolk — there is a fantastic support network. We’ve also received support from our Proaction business coach, who’s supported us every step of the way — even to the extent that he recommended we go to Funding Circle for our CBILS loan.

What advice would you give to other businesses trying to adapt to coronavirus?

Look at every cost you have within your business. Value your staff — they’re your most important asset, so you want to support them and keep them at the heart of all you do. But most importantly, stay positive. Rise to the challenge, and use this time to focus on becoming the best you can be.

More people are supporting small businesses

Millions of shoppers have pledged to vote with their feet and continue to support small businesses – after turning their backs on larger chains.

We asked 2,000 people for their views on small businesses and shopping, and the vast majority (80 per cent) told us that they’ve chosen to buy from independent businesses instead of larger chains during lockdown. A third of those have chosen to buy from a local bakery, while 20 per cent have purchased something from an e-commerce store, such as an online craft shop or book outlet. Independent greengrocers, coffee shops and florists were also popular among those we polled.

We also found that 54 per cent of those polled believe that they’ve supported small companies more than ever recently, and 9 in 10 are planning to continue doing so more often into the future. What’s more, 54 per cent have been introduced to a new independent enterprise over the past few months, showing that support for SMEs has been growing steadily throughout lockdown.

Playing an important role in society

It’s no surprise then that almost two-thirds admitted the lockdown has made them realise how important independent businesses are to society, with 76 per cent wanting to see more of them in their local area, and 96% agreeing that SMEs are integral to the economy and society.

Lisa Jacobs, Funding Circle’s UK Managing Director said: “It’s been fantastic to see how communities have come together to support small businesses at a time when they need it most. From choosing to buy a loaf of bread at your local bakery to visiting an independent florist for fresh flowers – these small actions make a big difference to small businesses.” 

“This shift in the way people shop will only be positive for the recovery of small businesses over this coming period and it’s promising to see that this trend is likely to continue into the future.”

We were pleased to see that 46 per cent of those polled were encouraged to buy from small businesses because of the unique products they offer, while 42 per cent said that high-quality goods entice them to shop with independent businesses. Half of those we asked simply like knowing that they’re supporting their local community, and 37 per cent enjoy the personal touch. As a result of this, shopping with small businesses has made people feel more positive (40 per cent), supportive (50 per cent) and happy (28 per cent).

Those we polled had purchased a variety of products from SMEs in recent months. Some of the most popular items included foods, home décor and gardening products, whilst a sixth of those we spoke to had also bought books, and a quarter shopped for birthday presents. Some of those we polled had even gone further than just spending money with small businesses, with 31 per cent recommending them to a friend, 19 per cent leaving an online review and 23 per cent liking SMEs’ social media posts.

Two-fifths of those we spoke to said they prefer independent brands, in a stark contrast to the mere 9 per cent that feels this way about large chains. Of those we polled who would rather shop with small businesses, 55 per cent preferred to spend their money with them than a big company, and 57 per cent liked to know they were making a contribution towards supporting the local economy. 46 per cent said it was a nicer experience shopping with an SME than with a large chain, while a further 39 per cent felt they knew where their money was going when buying from a small business. 34 per cent of those we asked even said they were willing to spend a little more to buy from an independent retailer.

All in all, our research shows a real commitment from the British public to SMEs, and we are looking forward to seeing if this continues to influence how people shop as the economy continues to re-open.

What the Summer Statement means for you – Jasmine Birtles

In the Chancellor, Rishi Sunak’s, super-soaraway Summer Statement there were lots of things to cheer about.  How they’re all paid for is another matter, but we can kick that particular can down the road for a few months at least and, where possible, make the most of the latest incentives to get our economy working again. 

Here’s what you could benefit from in the next few months:

Cheaper house purchases

To give the property industry a jump-start, the Chancellor announced a temporary drop in stamp duty. He did it by raising the threshold at which buyers have to pay stamp duty on residential properties in England and Northern Ireland, from £125,000 to £500,000. So if the property you’re buying is under £500,000 you won’t have to pay any tax on the purchase. This applies to property deals that happen from 8th July to 31st March 2021.

In Scotland they have announced that for their equivalent to stamp duty – the Land and Buildings Transaction Tax – the threshold is rising from £145,000 to £250,000 until the end of next March. Also the Welsh government has put up its Land Transaction Tax threshold from £180,000 to £250,000, again until the end of March 2021.

Free money for home improvements

Rather cleverly, Sunak announced free money for those wanting to improve the energy-efficiency of their homes, thereby both helping the trades while also improving the country’s carbon-efficiency. He is offering:

  • Up to £5,000 per household for projects that make homes more energy-efficient (in England), matching the householders (or landlord’s) spend at a rate of £2 for every £1.
  • And up to £10,000 for low-income households, fully-funding projects that will improve the energy-efficiency of their property.

Eat out on the cheap

For the whole of August – from Monday to Wednesday – you and I and everyone else in the country can each get up to £10 off meals we eat in participating cafes and restaurants. It’s actually a 50% off deal but it’s capped at £10 per head. The discounts will be applied to your bill and the restaurant will apply for the money back from the Government via an online form.

Help to retain jobs

The Chancellor announced that companies that retain employees up until at least the end of January 2021 will get a £1,000 bonus. That’s free money for businesses that are willing to keep on employees that are earning over £520 per month rather than make them redundant. 

Of course, for some businesses this will not be enough. If you are paying someone £4,000 a month, say, and you suddenly have no customers, then a one-off payment of £1,000 will not make up the shortfall. However, in some cases it could make the difference between retaining someone and letting them go.

Jobs for youth

Businesses are to get a helpful incentive to employ more young people, as it’s the youth who have suffered the most financially from the lockdown. Two programmes have been announced:

  • The Kickstart Scheme which is offering employers £1,000 for every trainee aged 16-24, on Universal Credit, that they take on (at least in England). Not only that but the first six months of their wages (national minimum wage) plus NI and pensions contributions will be paid for a 25-hours a week placement (and that’s for the whole of Great Britain). 
  • Money for an apprentice scheme where employers in England will get grants for £2,000 per apprentice under 25 that they employ, or £1,500 per apprentice over 25 that they bring in. The apprenticeships have to last for at least six months and the scheme opens on 1st August.

Help for students and unemployed

The Chancellor is clearly aware that a lot of younger people are facing a much reduced choice of job opportunities so he’s promised a lot of money to help them find something to do, even if it’s not actual work but education and training. He has promised:

  • £101m to fund studies for people aged 18 or 19 who can’t find work (this is in England only).
  • Double the number of work coaches in JobCentres across the country, plus an extra £150m for the ‘Flexible Support Fund’ which helps jobseekers find work.
  • £32m put into a National Careers Service to advise job seekers in England on work and training.
  • A job-finding support service for people who have been out of work for less than three months and £95m for the Work and Health Programme to help people who have been unemployed for more than three months.

All these measures are very generous and could be extremely helpful to businesses and individuals, not to mention the planet. However, the details, the deadlines, the start times and clarity on what and who qualifies for a grant, are all still to be found out. 

It is by no means clear which energy-efficient projects will qualify for grants, or exactly when the traineeships and apprenticeships will start or when there will be more careers advisors in Job Centres. The best we can do at the moment is to keep an eye out for announcements in the media and on the government website Gov.uk. That, and saving our pennies for lots of meals out on Mondays, Tuesdays and Wednesdays for the whole of August!

Jasmine Birtles is a finance expert on TV and radio and the founder of MoneyMagpie.com 

The views expressed here belong to the author and do not represent those of Funding Circle. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, such information contained here. If you have any questions, please speak to your professional adviser or seek independent specialist advice.