Reopening Irish firms after the Covid-19 crisis will not be clear-cut with issues like restocking and applying social distancing measures top of owner-managers’ minds.
A recent study by Chambers Ireland found that of those that need to restock, the typical amount required is €3,000 with 25pc of firms having to spend €8,000 on restocking.
For physical distancing measures, the typical cost will be €2,000, with 25pc spending in excess of €5,000.
“68pc of businesses have invoices outstanding, with €40,000 being the median amount owed”
The survey of 1,300 businesses, conducted between 24 and 28 April, found that 84pc of businesses expect revenues to decline by in excess of 25pc in the next three months.
Fears about cashflow and liquidity were the greatest concerns among micro-enterprises with less than 10 employees, with closures and staffing being a concern for larger businesses across many sectors.
Around 85pc of businesses have closed to some degree. Of these 27pc have scaled back activity, 24pc have front-of-house-closed with staff working from home while 34pc have shut completely.
In terms of a timeline for reopening, most businesses said they will need at least two weeks’ notice to reopen while 25pc said they will need at least a month.
A small minority in agri-food, tourism and hospitality will have to wait until next year to reopen.
Overheads for closed businesses
For businesses that closed, typical weekly overheads are approximately€2,000 while 25pc have overheads greater than €5,000 per week.
Of the businesses who have been hardest hit (those which have lost more than half of their revenue for the next three months), 60pc project that their 2020 annual earnings will be less than half of what they were expecting at the start of the year.
A whopping 68pc of businesses have invoices outstanding, with €40,000 being the median amount owed.
“While the economy was shut down to a large degree in a matter of days, the process for reopening will not be as straightforward,” said Ian Talbot, chief executive of Chambers Ireland.
“The last few weeks of closure have already cost businesses in excess of an average €10,000, in addition to the projections of revenue likely to be lost over the course of the rest of the year. For the median retailer that has closed, the costs of restocking before they can open will be €1,600, the costs of implementing physical distancing measures will be another €1,000. It will take them a week to reopen, which will cost another €2,000 in overhead costs.
“Of the businesses which have been hardest hit (those which have lost more than half of their revenue for the next three months), 60pc project that their 2020 annual earnings will be less than half of what they were expecting at the start of the year. 68pc of businesses have invoices outstanding, with €40,000 being the median amount owed, with only a quarter of business owners predicting that the majority of their invoices outstanding will be paid.
“With the above in mind, the question for many business owners is soon going to become not ‘Can we keep going?’, but ‘Can we afford to reopen?’” said Talbot.
Written by John Kennedy (john.kennedy3@boi.com)
Published: 8 May, 2020
