Losing major contracts can be a devastating blow to any company. However, it is important to not panic and instead take a step back and analyse the situation.
The first thing that needs to be done is to identify the reasons behind the loss of the contracts. It could be due to the pricing, quality of service, or even the competition’s offerings.
Once the reasons are identified, steps can be taken to rectify the situation. For instance, if it is a pricing issue, the company can consider offering discounts or more competitive rates. Alternatively, if it is a quality of service issue, the company may need to retrain its employees or invest in new technology to improve service delivery.
Another crucial step is to focus on customer retention. Losing major contracts can damage a company’s reputation and make it difficult to attract new clients. Therefore, it is important to maintain good relationships with existing customers and work on enhancing the value proposition of the company’s services.
Additionally, the company should also look for new business opportunities and diversify its client base. This could involve expanding into new markets or industries or developing new products and services to meet the changing needs of customers. By taking proactive steps and adopting a flexible approach, the company can overcome the loss of major contracts and emerge stronger in the long run
Can you renegotiate aspects of your remaining contracts?
Yes, it is often possible to renegotiate certain aspects of remaining contracts. If a company has lost major contracts, it may need to reevaluate its financial situation and make changes to its existing contracts to ensure its sustainability. Renegotiating contracts can involve changes in pricing, service levels, or even the scope of work.
However, renegotiating a contract requires the agreement of all parties involved, and it is important to approach the negotiation process with transparency and openness. Companies should be prepared to make concessions in order to reach a mutually beneficial agreement with their clients or vendors.
Renegotiating contracts can be a valuable strategy for companies looking to reduce costs, improve profitability, or maintain strong relationships with their business partners.
Use government financial support
Your company may be able to receive the financial support it needs to weather the effects of the COVID-19 pandemic, thanks to the government’s far-reaching financial measures to support businesses.
- Help for employers
For employers, the Coronavirus Job Retention Scheme has been extended until the end of October, which could be instrumental in preventing staff redundancies and facilitating the resumption of trading once conditions improve.
- Government loan schemes
Additionally, small and medium sized businesses may be eligible for two government-backed loans, the Bounce Back Loan Scheme and the Coronavirus Business Interruption Loan Scheme, which offer crucial emergency finance with no repayments required for up to 12 months and interest-free terms for the same period.
- Cash grants
Certain businesses and sectors in England may also be eligible for non-repayable grant funding that can be the lifeline needed to survive until new contracts can be secured. The retail, hospitality, and leisure sector in particular has been hit hard by social distancing measures, and could receive a grant of up to £25,000.
Similarly, small or rural businesses that receive small business rate relief or rural rate relief may be able to claim a one-off grant of £10,000 from their local authority in England. These financial measures represent a potential source of vital support for your company during these challenging times.
Alternative forms of finance
When a business loses major contracts, it can be a sudden and unexpected challenge, causing a severe cash shortage. This has been the case for many businesses during the coronavirus pandemic.
There are alternatives to bank lending that can support a company’s cash flow both in the immediate crisis and in the long term. One option is to use non-essential assets of value to generate cash. If your company owns such assets, this could provide a lifeline in challenging times.
Another option is to leverage the value of your sales ledger through invoice finance. This flexible option can provide regular amounts of working capital throughout each month, as long as your business is eligible.
By using these alternative financing solutions, businesses can maintain their cash flow and avoid the worst of the impact of losing major contracts. While it is still a challenging situation to face, exploring creative solutions can help businesses emerge stronger and more resilient in the long run.
Last resort insolvency options
While slipping into insolvency is a difficult situation for any business, there are still options for business rescue through insolvency measures designed to support the continuation of trade.
If your company is suffering from severe financial distress, restructuring the company’s debt within a Company Voluntary Arrangement (CVA) may be a viable option if you still have regular payments coming in.
Alternatively, company administration can provide the creditor protection you need while a plan is formulated to get your business back on track.
If your business has lost major contracts due to the coronavirus pandemic, it can be a stressful and worrying time. However, there is support available from licensed insolvency professionals.
Our team can provide you with reliable independent advice and help you to identify the best options to keep your business afloat. We offer a free same-day consultation in complete confidence, so please do not hesitate to contact us to discuss your situation. By working together, we can help your business emerge stronger and more resilient from these challenging times.
Read more: Restarting a company after liquidation
Conclusion
Recovering after losing major contracts can be a challenging process, but it is not impossible. The first step is to assess the situation and identify any weaknesses in your business model that may have contributed to the loss of contracts. From there, you can focus on rebuilding relationships with existing clients and reaching out to potential new clients. It may be necessary to diversify your services or products to appeal to a wider customer base.
Additionally, cost-cutting measures may need to be implemented to improve cash flow and make your business more competitive. Collaborating with industry partners or seeking expert advice from consultants can also be beneficial in identifying new opportunities and strategies for recovery. By being proactive and adaptive, businesses can recover from major contract losses and emerge stronger and more resilient than before.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.