23 June 2020
We have all become accustomed to the language of “phases” in the context of the Covid-19 pandemic. As lockdown restrictions are eased, what should SMEs be considering as we move into the next phase of the pandemic?
The following are some of the key items which SMEs should have in mind as they prepare to move out of lockdown:
- Review pipeline of upcoming work – a full review of scheduled work should be undertaken in order to ensure: (i) the work will still go ahead; (ii) the timings are still correct; and (iii) the covenant of the counterparty remains good (particularly where fulfilment of the contract requires some initial outlay such as purchasing materials, etc.). Reach out to existing / previous customers / clients to try and feed the pipeline.
- Review / update contracts with supplier / customers – a review should be undertaken to ensure that appropriate force majeure provisions are contained within contracts in order to protect against a potential liability should a further wave of Covid-19 strike, or another virus come along.
- Review / update existing terms & conditions in light of experience during lockdown to check where updates may be desirable, including non-performance and changes in performance as a consequence of the lock-down;
Review the business’s contractual infrastructure, e.g. property leases (break clauses); employment contracts; lending arrangements and covenants, etc.
- Review business insurances in light of coverage issues on business interruption and make sure that claims are lodged timeously.
- Assess the financial impact that lockdown has had on the business and prepare a detailed cashflow forecast, whilst also reviewing the business plan and business model.
- Identify any competitive advantages that have come to light and consider whether there are any gaps in the marketplace which you can take advantage of.
- Consider whether appropriate procedures are in place to ensure that principles of good corporate governance are being followed. It is easy for SMEs to forget about corporate governance with everything else that they are having to contend with, but directors must ensure that they are abiding by their duties and they should consider whether existing procedures need to be adapted or replaced to allow them to do so.
- Review Articles of Association and Shareholders’ Agreements, in light of shareholders’ respective individual arrangements and planning, to identify whether any changes are required. Ideally, this should be tied to a review of individual shareholders’ arrangements in respect of their Wills to ensure consistency across documentation.
- Consider whether there is any benefit to carrying out a reorganisation of any aspects of the business.
BTO is ideally positioned to advise on the legal aspects of all of these elements of business planning. Please get in touch with us to discuss any questions or concerns which you may have.
Gary Booth Partner: E: email@example.com T: 0141 225 4849