After self-employed income support and the furlough scheme, what next?

Jun 29, 2021 | Running a business

Government support for businesses has been a lifeline for many. 

The coronavirus job retention scheme (CJRS) kept employees on the books and helped provide their income when employers were struggling to make ends meet among restrictions and lockdowns.

The self-employed themselves became reliant on the self-employed income support scheme (SEISS) to not only keep them in business but to prevent their personal finances from going under as well.

The numbers speak for themselves. Since the CJRS began, 11.5 million jobs have been supported through it at some point in time. On 30 April 2021, around 3.4m workers were on furlough.

To date, £24.5 billion has been paid in SEISS grants to 2.8m individuals across four separate payments.

But things won’t stay like this forever. The fifth and final round of SEISS payments will be available to eligible applicants from late July onwards.

Meanwhile, the furlough scheme is being tapered off from 1 July, at which time businesses will have to contribute 10% to employees’ wages and 20% in August and September. Then, the scheme will cease.

But what happens after that? Will businesses be completely on their own? Will they have to shed staff? And what can they do to prepare? 

Business planning

Once the CJRS ends, unemployment might threaten the economy, while the end to the SEISS could spell the end of a number of sole proprietorships.

But before writing off their furloughed staff or business, employers should take a good look at their business plans to make their businesses viable and profitable in unrestricted but tough trading conditions.

This means running revenue projections and an overview of how much income is likely to be generated, and accounting for different scenarios, namely consumer confidence.

Assess cashflow and working capital positions with forecasts to check if your business has the working capital to cover increased payroll costs, as well.

When reviewing your business, you should also think about where you can save some cash and expenses. An accountant could be indispensable here, especially when reviewing your tax strategy. 

External funding

To further prepare for the end of the CJRS and SEISS, you might also want to consider what external funding you could get hold of.

For instance, have you considered a working capital loan? Many business owners take one out to help fund daily operational costs, like paying utility bills, rent or staff.

Alternatively, a merchant cash advance can give businesses a quick source of capital, with the repayments directly linked to the number of credit card transactions customers make.

There are also other Government schemes that your business can make the most of even after SEISS and the furlough scheme end.

Most notably, there’s the recovery loan scheme, which offers businesses between £25,001 and £10m, as well as invoice and asset finance from £1,000.

The Government is backing 80% of the loans, so lenders are in a much safer place to offer this type of loan than they would be others, so it should be a relatively simple process to get a hold of.

However, businesses will remain 100% liable for the repayment of the loan, so, as with any external loan or finance, it should only be taken after a conversation with a financial adviser. 

Staffing needs

After you’ve looked at your business structure and considered external funding, you might still need to look at your staffing needs, a difficult topic to consider after a year of such job insecurity.

Remind yourself of your goals and ask yourself if you need everyone on your payroll or just a percentage to achieve your post-pandemic business goals.

Think about how your furloughed workers will return to work too. Could you cut your costs by moving out of the office and working entirely remotely? But then again, what might your employees make of that? Will they stay if you do that?

If it’s seriously unviable to retain your current staff costs then you might need to think about redundancies.

You don’t need us to tell you that such a life-changing decision ought to be a last resort, so it’s important to talk through other avenues with an independent-minded professional to help your business once the furlough scheme ends.

Get in touch with us to discuss your business plans post-furlough.