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

by Clare Lang, partner, mfg Solicitors.

The ONS reports that the percentage of commercial transactions increased from 77% at the start of April to 83% at the end of April 2021.

It is now at a level similar to that observed in mid-December 2020. There were 15,476 business incorporations in the week leading up to April 30, 2021; an increase of 8% from the previous week and 10% more than the equivalent week of 2019.

Sage reports that 80% of small businesses expect profitability to return to normal levels by the summer; and a third of the companies surveyed said they would like to hire additional staff to meet the take-over demand. Sage estimates that this could lead to the creation of an additional 1.2 million jobs this year.

Such positive statistics show a strong rebound, but how did these companies get there? Looking at a representative sample of mfg customers, very few have closed their doors and only a small minority have gone out of business during the Covid pandemic. In fact, many prospered during the period by being flexible and moving towards new products, services and markets.

For example, Educational Arts and Crafts Supplies (Essdee), based in Worcestershire, have remained open throughout the pandemic, ensuring a safe place to work for Covid by providing flexible, home-based work. As the demand for arts and crafts products increased dramatically, Essdee saw its sales increase by 30%, forcing them to hire additional staff and invest in new machinery. While the company faced initial supply challenges during the lockdown, it worked hard to meet demand and Essdee is now launching a new product line (lino-to-fabric printing) to build on their success.

Parweld, a Midlands-based supplier of welding torches and consumers to the industry, has found new markets and new ways of working. During the pandemic, Parweld formed partnerships to provide welding products to DIY end users. They remained open throughout the lockdown, offering drop shipments on behalf of distributors to support them and their customers. Stability of operations and divergence in new markets means the company has continued to perform well.

During the pandemic, all employees of RE: Digital Group, an online stakeholder management software developer, were working from home. This has proven to be such a success that the company is now considering switching to working from home on a permanent basis. RE: Digital Group has also secured major projects with Newcastle Upon Tyne Hospital, Nottingham University Hospital and various other health trusts to help them manage the roll-out of immunization programs, using their Tractivity communications suite. .

In addition to existing businesses that have adapted, many entirely new businesses have sprung up; in some cases, as a result of losing their jobs due to foreclosure.

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

  • If you diverge into new product lines, do you have appropriate exclusivity and supply agreements with suppliers and distributors; and is the intellectual property of your products properly protected?
  • If you’ve created a new joint venture, have you made an agreement with your partner outlining the terms of the deal and what if things don’t work out?
  • If you are creating a new company, have you put in place a shareholders’ agreement to govern the terms of relations between members?
  • If you are moving out of a commercial building in favor of working from home, have you taken advice on the terms of your lease to make sure you can terminate it easily and without liability?
  • Do you have employment contracts, with non-compete restrictions, in place to recruit new recruits?
  • Are you aware of the financing options available to help you invest in new factories and equipment and do you need help securing that financing?

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 help. Please call us on 01562 820181 or email the partner and division manager, [email protected]

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