Cash is king as businesses do all they can to survive - Ken Long

The outbreak of Covid-19 has had a significant impact on businesses of all shapes and sizes and has posed a significant threat to the global economy. Companies have suffered as a result of the pandemic and cash flow is tight for companies who aren’t seeing the same profits as they were pre-lockdown.

Ken Long is a corporate law specialist at Wright, Johnston & Mackenzie LLP

Business leaders have had to make difficult decisions around whether to furlough staff and more recently, some have had to consider making redundancies. At the moment, many businesses are focused on doing all they can to survive, and during these uncertain times, cash is king.

For corporations across the board, funding is key. Our corporate law team is helping companies mitigate the impact of coronavirus by securing extra cash, whether it be through loans, or new equity investment from existing shareholders and new investors.

Some businesses have been able to take advantage of the COVID-specific loan schemes which may be available to them - in particular the Business Interruption Loan Scheme and Bounce Back Loan Scheme.

For others, the main focus has been on managing their existing borrowing arrangements. Some business leaders have been able to maintain operational resilience following the crisis by contacting their company shareholders for new equity investment. There are many options available for businesses, but it is important to act quickly.

In a constantly changing environment, COVID-19 continues to present significant challenges to people and organisations around the globe. The threat of new localised lockdowns or the reintroduction of tighter restrictions is hanging over many businesses. Some sectors, such as hospitality, will struggle as a result. For companies who provide a service to consumers, it is advisable to take a look at your business model and consider refocusing your efforts in light of the current crisis. One priority is to make sure that your online presence is strong.

The tech industry has been largely unaffected by the pandemic. If anything, app and software companies have seen a surge in demand as a result.

Many companies have decided to diversify and go online, to allow customers to purchase a product or a service from the comfort of their own home. Companies who have apps that provide a home delivery feature have also seen huge success during lockdown, as this allows people to socially distance while still receiving the products they love. Our team works with organisations who are creating websites with an e-commerce functionality to help them protect their intellectual property and make the best use of their intellectual assets and technology.

There are still people out there who are setting up or starting new businesses at the moment, so the outlook is not all doom and gloom. We are working with businesses who have remained unaffected by the pandemic, such as tech companies, to secure funding and get started with operations.

Despite everything, the investment community in Scotland remains strong. For example, one of our clients, Equity Gap, has completed 20 investment deals this year already.

The current crisis is not dampening the appetite for investors to support young and growing tech- based companies in Scotland This is hugely positive, as companies who have benefitted from funding in recent weeks will be in a fantastic position when we come out the other side of the current crisis.

Companies and business leaders are focused on navigating the pandemic, but they are also looking ahead and planning for a time when things start to improve. People still think there’s a worthwhile future, which is really refreshing. It’s our job to work with those companies to help find practical solutions for the time being, in order to provide a solid foundation on which to build on as they move forward.

Ken Long is a corporate law specialist at Wright, Johnston & Mackenzie LLP

www.wjm.co.uk