Keebles advises on how Covid-19 may affect digital businesses

Keebles advises on how Covid-19 may affect digital businesses

The economic effects of the coronavirus (Covid-19) pandemic are likely to be amplified at startups or fledgling digital businesses, according to Tom Rook, a solicitor at Yorkshire law firm Keebles.

With the health, wellbeing and financial impact of the coronavirus pandemic being felt across society, Rook has examined the challenges, concerns and potential business opportunities for companies in the digital sector.

He said: “This is unknown territory for all businesses, including those in the digital industry. Business owners and managers will be paying close attention to cashflow, employee management and customer retention.”

“The economic effects of the virus are likely to be amplified where startups or fledgling digital businesses are concerned. They may not have the well-established customer base or lines of credit that a bigger market player has. Their policies and procedures may not be as well-developed, and so it is vital that they refer to government and other industry guidance when implementing measures to deal with any implications of Covid-19.”

“However, smaller businesses may benefit from being more adaptable than their larger counterparts, and government support is also available (cash grants and assistance with sick pay will be offered to eligible small businesses).”

Potential challenges along the supply chain exist for firms all sizes, he continued. “It may be that a supplier has let you down, or your business might be struggling to perform the contract. Practical steps can be taken to minimise the impact, for example, stockpiling hardware and sourcing alternative providers. The legal terms of trading will play a large part in determining who bears the financial risk in the event of a breach of contract.”

One issue that Rook is seeing is the cancellation of advance bookings. This could include the cancellation of a venue-hire or a pre-booked service such as IT maintenance.

He explained: “Consumer laws generally afford a consumer a high level of protection in the case of cancellations, however, under a business-to-business contract the position is a little less certain.”

“The balance of risk will be determined by the legal agreement between the parties. Businesses should check the terms of the contract and the ‘force majeure’ clause (or ‘events outside of our control’ clause), to see where the relevant losses will fall.”

Rook continued, pointing out that opportunities exist for digital businesses in the current climate: “It may seem coarse to consider business opportunities at a time like this, but the increased need for many businesses to be able to operate remotely may create unexpected demand for tech and digital services.”

“Some companies who had never previously considered the ‘working from home’ model will now be forced to trial it. Microsoft and Google are playing their part by offering free trials of their Hangout and Teams tools. Virtual events are likely to become more widespread and sectors such as health and education will increasingly rely on technology, for example, video consultations and remote learning.”

“By meeting this demand with existing products and developing new solutions, a tech or digital service provider can play their part in helping the country through this difficult period, whilst at the same time continuing to grow.”

Categories: Coronavirus, Legal, News

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Mark Dugdale

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