Graeme Smith
London
In life we like certainty and strive to simplify issues into distinct options. Unfortunately the reality is almost always much more messy.
This is how it feels at the moment with increasing talk and speculation about an exit strategy from the lock down and we can all start getting back to normal. There is plenty of discussion about the timing and sequencing of re-emergence and also the revenue levels we will emerge into given the restrictions of social distancing.
The elephant in the room though is the spectre of another wave of closures in the future if (when?) the virus spikes again. There is plenty of commentary from the scientific community that suggests that even once this spike recedes we should expect it to spike again until a vaccine or overall immunity is reached.
This means that whilst businesses are right to focus on the re-opening phase and to negotiate with their suppliers and stakeholders (including landlords and lenders) about existing liabilities and the hibernation period, this negotiation needs to not only build in sufficient flexibility to re-open into an uncertain market but also to consider what will happen if closures are required in the future.
Without clarity over how this will work and that the cost base can be sufficiently flexible to respond to this scenario, the risk is that owners will conclude it is too risky to re-open. Knowing that government schemes such as employee furloughing and CBILS lending can be reactivated, rents can be turnover-linked and certain supplier payments can be paused, will help to encourage business owners to take the risk, be brave and re-open.