For the time being, many businesses are fire-fighting – deciding who to furlough, chasing debtors, shoring up cash flow by raising short-term funds. However, there will be a point at which business starts tentatively to adjust to a new normal. At that point, it may be worth reflecting how your business could become more effective in future.
Good businesses will have treated their staff, customers and suppliers with respect and consideration during a rough period. Many businesses have done a fantastic job of keeping in touch with furloughed staff, showing patience with under-pressure suppliers and acting with integrity towards their customers.
However, there will be ‘people’ questions as the world emerges from lockdown. When and how do you unfurlough? The government is currently looking to pay grants under the job retention scheme until 30 June 2020 but you might need those people back in the business earlier to ensure you are prepared for business as usual. Has the scheme done enough to support the business’s cash flow or might you need to make redundancies? How does this fit with your business plan?
While the recruitment market has been on hold, it is possible that stronger businesses with deep pockets seek to buy in resources to help them upscale. Poaching may be easier if individuals are disillusioned, having been subject to pay and bonus freezes. Re-engaging people in the value and purpose of the business will be important.
These challenging periods are often the making of successful entrepreneurs. If your business has managed to survive – even thrive – through this period of uncertainty, it is worth taking time to reflect on what you have learned as an owner and a business manager. Knowing what you know today, what contingency planning will you put in place? What will you do differently in the future? Perhaps you will take the cautious approach, ensuring that you have a year’s salaries in cash, plus a plan B for your supply chain. Are there other ways you will make sure your business is agile and flexible?
A key takeaway for many businesses will be how successfully they have managed to work remotely when they had to – for some this was already the norm, but for a lot of businesses there will be a “new normal”. Do you really need office space to house 100% of your staff if people have worked effectively and efficiently from home? This could be a major cost-savings in the longer-term.
The nation is likely to emerge from the pandemic in more serious frame of mind, preferring to work for a business that has real value and purpose. The best business owners are adept at motivating their workforces and encouraging them to share their vision. That said, it may be worth re-examining whether the business’s original purpose is still as relevant in a post-Covid world. Might you need to adapt the long-term objective of your business in light of the new environment in which we find ourselves?
Most companies will be undertaking a review of their supply chain, which in many cases have proved too inflexible to meet business demands adequately. There is likely to be a move to bring supply chains closer to home as the perils of lengthy and complex supply chains have been exposed. As always, business owners will need to balance the potential cost savings associated with remote supply chains with the greater threat of disruption.
There is a secondary consideration – how was your business treated by its suppliers during the pandemic? Did they value your business? Did they give you what you needed when you needed it? Equally, you may find that other suppliers are enthusiastic to win your business and happy to offer enticing deals. This will all have an impact on whether you want to go back to existing supply arrangements or reshape your business partnerships.
The new normal
In the new landscape to emerge after the Covid crisis, you need to make that going back to what you had before is the right option. It may have prompted you to revisit your cost structure – what do you really need? Do you need expensive premises? Or simply a functioning Zoom subscription?
If your business has emerged from the crisis, it should have laid bare what is really important to help it thrive in future. Don’t waste that valuable insight.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.