Survival of the flexible – planning for your business in the new era

by Clare Lang, partner, mfg Solicitors.

The ONS reports that the percentage of businesses trading has increased from 77% in early April to 83% in late April 2021.

This is now at a similar level to that seen in mid-December 2020.  There were 15,476 company incorporations in the week to 30 April 2021; an 8% increase on the previous week and 10% higher than the equivalent week of 2019.

Sage report that 80% of small businesses expect profitability to return to normal levels by the summer; and a third of companies polled said they would like to recruit additional staff to meet recovery demand.  Sage estimate this could result in 1.2 million extra jobs being created this year.

Such positive statistics evidence a strong bounce-back, but how have these businesses achieved this?  Looking at a cross section of mfg clients, very few closed down and only a small minority stopped operations during the Covid pandemic.  In fact, many thrived during the period by being flexible and diverging into new products, services and markets.

For example, Worcestershire-based Educational Art and Craft Supplies (Essdee) remained open throughout the pandemic, ensuring a Covid safe workplace by offering flexible and home working.  As the demand for art and craft products increased significantly, Essdee saw a 30% increase in sales – requiring them to recruit additional staff and invest in new machinery.  Whilst the business faced initial supply challenges during lockdown, they worked hard to meet demand and Essdee are now launching a new range of products (lino printing onto fabric) to build upon their success.

Parweld, a Midlands-based supplier of welding torches and consumers to industry, found new markets and ways of working.  During the pandemic Parweld formed partnerships to supply welding products to DIY-savvy end users.  They remained open throughout lockdown, offering direct deliveries on behalf of distributors to support them and their customers.  The stability of operations and divergence into new markets means the business has continued to perform robustly.

During the pandemic all employees of RE:Digital Group, an online stakeholder management software developer, worked from home.  This has proved so successful that the company is now planning to move to home-working on a permanent basis.  RE:Digital Group also secured major projects with Newcastle Upon Tyne Hospital, Nottingham University Hospital and various other health trusts to assist them in managing the roll-out of vaccine programmes, using their Tractivity communication suite.

In addition to existing businesses which have adapted, lots of completely new businesses emerged; in some cases as a result of people losing jobs over lockdown.

Whether you are a new business or an established one which has made or is making changes, it is essential to plan for the future and ensure that you have taken proper advice in relation to your planned activities.  For example:

• If you are diverging into new products lines, have you got appropriate exclusivity and supply agreements with suppliers and distributors; and is the intellectual property in your products adequately protected?
• If you have entered into a new joint venture, have you got an agreement with your partner setting out the terms of the arrangement and what happens if things don’t work out?
• If you are setting up a new company, have you put a shareholders agreement in place to govern the terms of the members’ relationships?
• If you are vacating a commercial property in favour of home working, have you taken advice on the terms of your lease to ensure that you can terminate it easily and without liability?
• Have you got employment contracts, with non-compete restrictions,  in place to tie in new recruits?
• Are you aware of the funding options available to help you invest in new plant and equipment and do you need help to secure that funding?

If you would like more information or advice on any of the topics mentioned above or other aspects of your business, the Corporate team at mfg Solicitors LLP can assist.  Please give us a call on 01562 820181 or email Partner and Head of Division, clare.lang@mfgsolicitors.com