When ex-footballer Iain Dowie coined the word ‘bouncebackability’, he probably wasn’t thinking of UK businesses or possible future pandemics. The word seems apt, however, as we all grapple with the potential consequences of Covid-19.
We are all aware of, and many of us have lived through, previous economic cycles, but this feels very different. At its heart this is clearly a public health crisis, but the impact on our daily lives and livelihoods is now being felt. It seems unprecedented, although the Spanish flu epidemic in 1918 arguably hit at a time when the world was far more vulnerable.
Mark Allen and Bob Alsop from Crowe UK explain. the key difference to more recent economic shocks, including the financial crisis in 2008, is the rapid response from the UK Government to provide direct financial support to employers and employees, largely through ‘intravenous’ measures such as tax deferrals, the Job Retention Scheme and by guaranteeing facilities under the Coronavirus Business Interruption Loan Scheme; though the distribution and effectiveness of these facilities will be tested over the coming weeks and months – an area where we are actively supporting local businesses.
We have spoken to many clients since the lockdown was implemented and have been encouraged by their pragmatism and optimism. Many are focused on operational matters of course, with the health and wellbeing of their staff being paramount. Others have already taken steps to ensure they have sufficient headroom to trade through a difficult period. Almost all expect the current situation to be temporary and are seeking to ensure they can take full advantage of the bounce back, when it arrives.
The trend towards agile working has been a strong driver of growth in the technology sector for a number of years, with investment in relevant hardware, applications and infrastructure delivering significant progress. While it wasn’t necessarily designed with the current situation in mind, many of us are feeling the benefit of that investment now as we adapt to homeworking and different ways of communicating with each other. Business owners are also much better equipped to monitor business performance remotely and to therefore make informed operational and financial decisions. The enforced agile working we’re currently experiencing will no doubt take that to the next level. It will highlight gaps and inadequacies in the infrastructure and technology winners will emerge as, for example, standards develop in communications and secure data sharing.
The cultural aspects of remote working may now also evolve more quickly than they would otherwise have done. We are having to learn to be more structured in our communications with a greater focus on the planning, execution and review of workstreams and the resources required to deliver them. The most successful UK businesses will be those who learn from these lessons and implement changes to ensure their operations are both effective and resilient going forward.
So what other lessons might UK businesses learn from the current crisis? It’s clearly a dynamic situation and further challenges may emerge over the coming weeks and months, but we have considered five key areas SMEs in particular might consider:
1.Stay close to your staff. As a professional services firm, we are acutely aware that our people are our key asset. That goes for other industries too and we can all implement small changes to make a big difference to the way we engage with our employees. Communication is at the heart of this – people are resilient, but they need to hear clearly and regularly from those in leadership positions. Staff also often have great ideas that should be heard. Many companies have very effective platforms for staff interaction and probably reap the benefit when teams need to come together. It’s a cliché to emphasise the importance of teamwork, but proximity to and alignment with your staff undoubtedly creates a valuable bond in times of challenge.
2. Improve your management reporting. We know from our client interactions that different business owners and managers take a different approach to management reporting. Clearly, there isn’t a one size fits all approach and the level of detail in your financial reporting should be proportionate to the size and complexity of the business. When market conditions change, however, whether for the better or worse, sound management reporting has two key benefits. Firstly, it enables you to identify quickly the impact on your business and secondly it means you can report externally faster and more accurately. Many businesses are considering their current facilities and funding options for example, for which robust reporting is critical.
3. Create a clear 3 year plan. As well as understanding how your business is currently trading, you should have a good idea of where it could be trading in the future. This is good business practice for any size of company and helps to inform decisions and allocate resources. It also enables you to look at different scenarios. What if market conditions improve – can you take full advantage? And what if market conditions suddenly deteriorate – do you have contingency plans in place to cope? Many owner-managers have their own private plans that link to their personal ambitions, but a clear written plan drives consistent behaviour throughout the business and forces management to consider the ‘what ifs?’.
4. Invest in technology. Of course most businesses are constantly investing in technology. The exceptional nature of the current crisis should, however, give business owners pause for thought when it comes to how strategic that investment really is. Technology has the ability to not only make your business more efficient, but also to provide flexibility in how resources are managed and allocated in times of uncertainty. Again, this should be proportionate to your business and relevant to your industry, but it is worth considering whether your existing communications platforms, accounting package, stock system, CRM, ERP etc. are effective, scalable and sufficiently well integrated. Taking it further, could you make better use of technology in the delivery of your products or services?
5. Prepare now for the next crisis. Inevitably, UK businesses are feeling the shock of the COVID-19 pandemic and are reacting to both internal and external factors on a day by day basis. Few if any will be able to say they were fully prepared. Each crisis will be different to the last, but the more prepared you are as a business, the better placed you will be to pre-empt changes in your trading conditions and take clear and decisive action. The current crisis clearly has longer to run and may contain aftershocks that will test us further. Be prepared and focus on longer term resilience, operationally and financially.
All of the above could be considered common sense, but is perhaps a useful reminder of those areas in our business that we take for granted. Most businesses will have the resources (time being the key one) to address these areas internally. Others may need external support and advice from specialists who can provide a wider market perspective. Either way, it would be time well spent and we are always happy to act as a sounding board as you consider your own business requirements.
We are sure that UK businesses will emerge from the current crisis having learned some valuable lessons. They will become more agile by staying closer to their workforce and embracing different technologies, becoming more creative in the way they communicate with their staff, planning for the future and being better prepared for future shocks. UK businesses have shown many times that they have bouncebackability – we are hopeful that this crisis will be no exception.
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