4 May 2020
The SMEs of Britain have reacted quickly and prudently to the Covid-19 crisis and the associated financial difficulties which are being acutely felt around the UK. That has included making difficult decisions to furlough staff, pause production, cancel orders, suspend plans and for many business owners, taking a significant or total reduction in their own pay. The government’s announced support for small business is welcome and we urge businesses to take advantage of these schemes (find out more here) to help manage their staff costs, cashflow and supplier payments. At this moment, the most important thing for a business to do is to survive.
But making defensive decisions to ensure short term survival shouldn’t mean that businesses neglect to prepare for the rebound. As we’ve seen in China where between 70% and 90% of businesses have resumed their activities, restrictions will eventually begin to lift. In fact data from China (1) suggests that when the rebound does come it may happen quickly: coal consumption is already up to 75% of 2019 levels (from 43% at depth of the crisis) and real estate transactions are up to 47% of 2019 levels (from just 1% at depth of crisis). Of course China still has a long way to go and there’s no guarantee that the recovery in the UK will follow the same shape, but what is clear is that making sure your business has a plan when normality does begin to return is vital.
Evidence from previous downturns have shown us that when the time comes, it is those business who will be most prepared that will rebound the most effectively.
Every business is different and business owners and decision-makers should consider the right plans for their circumstances, but they shouldn’t let the urgency of the short term stop them looking ahead. These are some examples of areas where advance planning could help your business when the time comes:
The most obvious place to start for many businesses will be managing supply chains, production and orders. Depending upon your business there may be different elements to consider but some of the plans and questions you may want to look at are:
Professor Chris Whitty (Chief Medical Officer for England) has publicly stated that “highly disruptive” social distancing would need to be in place for “really quite a long period of time”. Many businesses are already operating a socially-distanced working model, but for those that have suspended work on site or have switched to remote working, it will pay to prepare for this now. Some areas to consider:
Clear communication internally and externally is always important, but will be especially so as businesses transition out of lockdown. There are a number of key audiences to consider:
While many businesses may be able to ‘pick up where they left off’, for others the profound changes brought about by the pandemic may require them to change or adjust their offering. Or for some the changes may even have created new opportunities.
The starting point is to assess your offering and the associated demand. Talking to your customers and other industry sources may help you form a point of view on this.
If you do think there’s a case to adjust your offering, it’s important that you do so in a way that minimises risk. The starting point should be to understand and identify your core competencies, expertise, and available resources. In most cases offerings that build from an existing position of strength are more successful and sustainable.
With the duration of the recovery period unknown and global market volatility extremely likely, it’s important that your plans are able to flex as much as possible as market conditions change.
To enable this you may wish to consider building flexibility into your staffing and supplier agreements and making a series of best case and worst case plans so you can adapt to changes quickly. Businesses should be looking to create long-term plans but with ability to react quickly to short-term changes.
(1) Source: BGC Centre for Macroeconomics, Harvard Business Review