Not only is professional football a major industry in and of itself, it can also provide a few lessons to other business sectors. For example, football clubs in the UK receive an automatic points deduction (most commonly 12 points) if their club enters an Administration process.
The thinking here is that any club entering into Administration to deal with their financial issues receives a financial boost that could give them a competitive edge over their division rivals when it comes to chasing promotion or battling relegation, so the threat of a points deduction encourages financial care.
The points deduction recognises that a club has been:
- Given the benefit of shedding debt and receiving a financial edge over their rivals, and
- Offered the advantage of professional financial guidance with no direct cost to the club
Football clubs are businesses themselves, most in the form of Limited companies. There is a definite ‘competitive advantage’ that can come from taking financial advice sooner rather than later, but unlike with football clubs, in most industries this guidance will come without the threat of a points deduction!
While a number of lockdown measures have eased and certain sectors have been able to open up, many have done so with significantly reduced turnover and other sectors have been unable to open at all. The types of financial uncertainty that will continue to affect many businesses will include:
- The regional impacts on your business as different parts of the country face restrictions/lockdowns.
- The impact on your business that comes with being in a formal recession.
- Will interest rates remain at a record low? What will happen to your business if/when they increase?
- Will the Government secure a Trade Deal with the EU at the end of 2020?
- Could you afford the costs of any redundancies that came due to ongoing reduced turnover levels?
- Dealing with deferred taxes from Quarter 2 of 2020 that are due in 2021, coupled with any loan repayments that start in 2021 for bounce back loans taken out in 2020.
There are a number of businesses across a variety of business sectors facing daily issues with:
- An inability to lower overheads in line with decreased turnover.
- Many customers not paying within previously agreed terms.
- Difficulty in being able to make reliable future financial projections.
- A lack of cooperation from landlords with negotiating reduced rents.
Given that other industries do not face the points deductions applied to football clubs, business owners should act now to gain a competitive edge. The key advantages of taking professional advice early are:
- There are often more options for businesses that take advice early. We offer bespoke advice to fit the circumstances of each business, including exploring whether there are alternatives to insolvency.
- Enlisting a second opinion may highlight financial options your Board have not yet considered.
- Strengthening your financial position at present, ready for when business returns to relative normality, will give your business a competitive advantage over many of your counterparts.
- It can help ensure your company’s working capital is not exhausted covering existing losses during the next few months and give the best chance of sufficient working capital as things return to normal
Whatever your industry, why not get a headstart on your competition and book in for a free no-obligation call with our Business Recovery team? We’re available by phone on 0300 303 8284 or by email over at firstname.lastname@example.org.