What's next for small businesses ?
As we emerge from lockdown, business owners are facing a very different world. So how exactly can entrepreneurs navigate these uncharted waters?
It’s been a disruptive year for business owners and, doubtless, there’s more in store. The coronavirus crisis and ensuing lockdown have required them to reassess their lives – both business and personal. For many owners of small and medium enterprises (SMEs), the past few months have been all about survival. But as restrictions lift and trading is permitted once again, there are clear signs entrepreneurs are ready to get moving. “In the last three weeks, we’ve seen a shift. Businesses are stabilising, and there’s now a sentiment of optimism,” says Martin Brown, CEO of business adviser Elephant’s Child. “Owners are beginning to think about how to grow again.” In the early stages of the pandemic, many companies were busy with crisis management, evaluating whether their business was at immediate risk, accessing government support schemes and creating short-term contingency plans. Now that we’re in the next phase of the crisis, they’re likely looking beyond day-to-day survival. How will they bring back employees from furlough over the coming weeks? Do they need to adjust their strategy or budget if they want to scale their business? And if they were thinking about – or in the process of – exiting, how has the crisis changed things? Innovation is key Businesses should be thinking like start-ups, Brown says. More agile than their more established counterparts, SMEs can benefit from flexibility and a structure that allows for creative problem-solving or rapid changes to ways of working. Many have already changed their business models in order to survive: restaurants have turned into takeaways; events businesses have switched to webinars; and we’ve all had a crash course in video conferencing. If owners haven’t yet pivoted their business in response to the crisis, now might be the time to rethink existing strategy and try new ideas. Is there a niche market that has normally been overlooked? Are there ways to build your brand without significant expense? “Although some companies are likely to disappear,” Brown says, “others are seeing this time as an opportunity – a period when their businesses can really take off.” It’s unlikely that most firms will simply be able to return to ‘business as usual’ in the new post-coronavirus world. Reduced headcounts and the possibility of ongoing social distancing measures mean companies will need to respond accordingly. However, this could be a good thing. “We should be cutting commuting time,” Brown says. “Do we really want staff travelling and wasting hours every day? There’s also the very big question of whether we even need the offices.” Owners should learn from this time of change: what works, what doesn’t, and what can be applied across the business. Putting plans in place Restarting or re-imagining any business requires extensive planning for the future, and hopefully the soul-searching of lockdown means business owners are ready to return – and thrive. “The past few months have led a lot of us to reflect on what we really want. Business owners may need to reassess their own aspirations, ambitions and purpose,” Brown says. But these reflections still need to translate into action. During times of crisis or uncertainty, businesses may need to monitor liquidity and cashflow on a very granular level. A 90-day rolling strategy that can be regularly assessed and updated will help business owners maintain flexibility as the consequences of the pandemic become clear. As things stabilise further down the line, an annual operating plan and longer-term approach may be more appropriate. This is where owners can assess whether their strategy is fit for purpose and establish new goals – and a clear vision for their business. Thinking to the future Lockdown led to pollution levels plummeting as road and air travel declined sharply. There’s some hope that this might lead to a much-needed shift towards a more sustainable economy. “Business owners really should be thinking about doing their part in making the planet sustainable, and now seems a great time to do so,” Brown says. “Those who don’t will struggle to attract the best clients and staff in the future, as sustainability will only grow as an issue of importance.” Given their inherent agility, SMEs may be able to more easily embed sustainability measures than a large company. Replacing travel with video conferencing is more efficient in many ways, including by reducing emissions. Cycle-to-work schemes make the commute cleaner as well as improving health and fitness. Other initiatives, such as investing in renewables or greening the supply chain, take more planning, but the marketplace has many options. Leaders of SMEs will be critical in helping the economy – and planet – return to health. Now is the time to commit, strategise and plan with velocity to thrive after lockdown. The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.
Written by Graziano Lingo - Senior Partner at St. James’s Place Wealth Management.