Bridging through the storm - how are entrepreneurs reacting to COVID-19?

Speaking to entrepreneurs with a strong network around them has demonstrated to me the importance of knowing the measures others are taking, to give guidance and know which decisions to make yourself.

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Due to recent conversations I’ve had with clients, I know a number of SME businesses have felt isolated during this time of uncertainty. 

As a Corporate Finance adviser working with entrepreneurial clients, I am in a privileged position where I regularly speak to a large cross-section of the SME market, including businesses, Private Equity firms, Venture Capital firms, lawyers and banks. Therefore, I wanted to share my insight into how entrepreneurs are dealing with these unique times, for anyone feeling isolated in the current climate.


While a number of businesses have experienced a shock, the hardest hit have been businesses in events, leisure, travel, retail and food and beverage industries. At best, these businesses have experienced a complete stop. At worst, some I have spoken with are facing a threat of having to return payments to customers for events or services that can no longer be provided, including those in events and travel.

For businesses outside of these industries, by far the most common story I hear is of businesses operating remotely but seeing a moderate drop in demand, either from those in harder hit industries or customers reducing spend until they have assessed the impact of the measures.

On the positive side of things, there are some businesses recounting to me an uptick in revenue, particularly those in healthcare, gaming and eCommerce. In addition, a few SaaS cloud based platforms I have spoken with are also quietly confident in their business, as more of the world looks for online solutions to keep operating during these times.

While the impact across all entrepreneurial businesses is hard to assess in the entrepreneurial market, the FTSE AIM All Share, which should represent the closest approximation to the SME market, was trading at 972.62 pre-virus and dropped to a low of 589.63 before recovering to 668.30 on 1 April. Currently this represents a reduction of nearly 30% on the peak, indicating the average SME business may be experiencing a similar drop in trading and value. This corroborates the impact I have assessed from discussions with privately owned businesses in the market.


The reaction of most businesses and their owners (as well as myself!), can probably be characterised by the Kubler-Ross Change Curve, which characterises human reaction to change (an illustration of which is below). Over the last couple of weeks, there has definitely been a lot of shock to deal with. However, it is important we all remind ourselves that, the first major changes were only a few weeks ago, a very short period in most business cycles.


Over the course of the last week, partially due to the government support measures announced, most businesses seem to be moving out of shock and more towards the experimentation phase, as they look for solutions to mitigate the impact in the short term and start to plan for recovery. There will still be a lag until some of these measures will yield cash but knee jerk reactions seem to have been relatively small and from the businesses I have spoken with, there seems to be a level of breathing room in the short term. The level of positivity has been both encouraging and reassuring.



This is one of the major support mechanisms introduced by the government. Furloughing staff means that 80% of salary up to £2,500 per month can be reclaimed from HMRC. Some of the businesses I have spoken with were considering tougher action but have shelved this as they now have the opportunity to secure the jobs of staff while minimising financial impact, thus, they have warmly welcomed this measure. However, there is still a level of uncertainty around the rules (unsurprising as furlough was not in most vocabularies a month ago) with some businesses still allowing employees to volunteer to work, which is not allowed under the government scheme.

Pay and working time reductions

For senior staff or employees who can’t be furloughed, some businesses have taken measures to reduce working hours or introduce temporary pay reductions or deferral of pay to manage cash flow. The aim of this is to reduce the need for any redundancies to keep the work as intact as possible to return to normal after the end of the scheme. Unfortunately some businesses worst affected have had to make some redundancies, however these have been in the minority so far.

Coronavirus Business Interruption Loan Scheme (CBILS)

CBILS caught the eye of many businesses, viewing this as ‘free money’. However, many have seen their expectations exceeding the reality; from early indication, the scheme is only available to businesses that could have accessed finance pre-crisis. For these businesses, there needs to be a clear use for the loan, an understanding of the impact of COVID-19 on the business and a plan to repay the loan. Getting this right is key to being able to access the funding. Click here for information on how we can support you with your CBILS application.

Beyond the CBILS, traditional lines of funding, such as invoice finance, and more inventive loans, such as those that accelerate R&D tax credits, are still available.

VAT and PAYE business support schemes 

More business support schemes announced by the government include the VAT payment deferral which is for all UK businesses and means that taxpayers will be given until 31 March 2021 to pay over any accumulated liabilities. Refunds will be paid as normal. This is automatic and no application is required but if you currently pay by Direct Debit, you need to cancel this otherwise their VAT payment will be taken as normal.

There is also the PAYE tax payment deferral. All businesses unable to meet tax liabilities may be eligible to receive support through HMRC’s ‘Time to Pay’ service. You can call HMRC’s dedicated helpline if you have missed or intend to miss tax payments, on 0800 024 1222. Arrangements will be agreed on a case-by-case basis but decisions are typically given immediately over the phone. If you are uncertain about future cashflow, it is advisable to apply ASAP.

Both of these schemes provide short term cashflow relief and can be one of the most immediate forms of ‘financing’.

Equity funding

While Private Equity deals involving cash out to shareholders have, on the whole, paused, there are still some pots of growth capital available for businesses in the meantime. We’ve had several accounts of deals both completing and entering exclusivity in the last couple of weeks.

Businesses interested in this will need to have a strong growth plan, but is being seen by some as an attractive option to secure the short term and have a war chest to take advantages of opportunities that present themselves as we come out of this pandemic. However, there is likely to be an impact on value given the impact in the equity markets have experienced and more of a focus on short term trading. Also the Enterprise Investment Scheme (EIS) association are currently lobbying the government to enhance tax reliefs for investments to encourage money to keep flowing to growing businesses.

Fundamentally, there is no one size fits all approach and each business will have been, and need to continue to, assess the right measures. The above are just a few of the options available to businesses, but on the whole there is no magic bullet. Bridging the next few weeks will be critical to allow businesses to bridge to furloughing finance and potential loans (if eligible).


There is no hiding that the immediate future may be challenging and unfortunately some businesses will not make it through, but for those that do make it there will be opportunities to continue to grow in a market with reduced competition.

It is encouraging to hear a large number of accounts undertaking new product development or the deployment of technology in response to the crisis. Just a few examples include training and events businesses running online events via technology rather than physically, video production agencies using animation rather than live action videos, sales teams saving time on travel by using online meetings rather than physical meetings and breweries moving to direct to consumer models. 

In addition, as long as the measures are not in place for too long, businesses in industries such as travel are expecting a release of pent up demand when measures are lifted. Finally, some are also considering the opportunity to embark on buy and build strategies and make acquisitions of struggling competitors at this time. 


While it feels like normal life was a lifetime ago and life recently has been tough, the tone of shock has quickly moved to one of overwhelming pragmatism and optimism. Unfortunately, nobody knows exactly how long these measures will remain in place, but the key is to ensure that businesses can safely navigate these uncertain waters so they are best positioned to take advantage of opportunities as the storm calms. 

I plan to follow up with some further insights into what has happened in the M&A market specifically, but ultimately, I (as I am sure we all do) want as many businesses as possible to come out of this in the best shape possible, and I hope I can, in at least some small way, help as many as possible to achieve that. 

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