From lockdown to back to business, will we be going from pause to play or Restart and Fast forward?
As we take the finger off the pause button and follow the road map back to some form of normality, are we as businesses facing the challenge with the correct mindset?
It seems a long time since the article I wrote in May 2020, Play Pause or Restart. The point I made back then was that many businesses I spoke with were looking at simply being on pause and at some point, the finger would come off pause and normal play would resume. The only unknown was when the pause would be released, but surely it would be in 2020. Well, nine moments later and a further two lockdowns and we all know that was not the only question to consider.
So, with the 1st anniversary of the 1st lockdown being with us, and the economic climate that few of us have experienced how do we approach the restart of the roadmap to some form of normality?
I believe that as a business we cannot simply think along the lines of the “business as normal” mindset. The most successful business of the next 5-10 years will be those that have taken this time on pause to adapt to restart in economic conditions and an environment that simply not only did not exist pre-pandemic but could not have been imagined changing so quickly. Changes to the high street and our shopping habits that should have taken 7-10 years to happen have happened in a few short months, the same with our views to working from home and use of video conferencing for business meetings and sales meetings.
More home working is likely to be a permanent fixture for a majority of businesses, according to a study.
A survey of just under 1,000 firms by the Institute of Directors (IoD) showed that 74% plan on maintaining the increase in home working. More than half plan on reducing their long-term use of workplaces. A smaller survey of bosses, whose firms had already cut workplace use, suggests 44% of them think working from home has proved "more effective".
So, what is a restart and fast forward mentality, as opposed to an off-pause mentality? Primarily, it is ensuring that we have a simple but relevant action plan for our restart. We are all about to invest a large amount of time, effort and money into restarting our business - for some this may be a full reopening of premises that have been closed for a considerable time and the return of furloughed workers to the workplace, for others it may be a return to the office that has been operating on a part-time skeleton staffing basis or simply for the one-man-band the opportunity to get back into the market place that has been restricted, but for all, it should be planned and based on sound strategy with the right resources at the ready.
We should be creating business plans, marketing strategies and reviewing our financial planning based on a post-pandemic market place and economy and not on what we knew before. How will we manage our teams and communicate within our business? What are our clients' future needs and how can we best serve those needs? These are just a few of the questions we need to consider with new thinking.
Competition, once the restart happens fully, will be very strong. In most economic downturns, the law of supply and demand dictates that the number of companies looking to supply reduces in line with the reduction of market demand. This current economic climate is unique. Unprecedented government intervention in the market place, via financial support for employees’ wages via the furlough schemes, has meant that redundancies have been synthetically prevented and a staggering 1.27 million+ bounce back loans, with little or no due diligence on the ability of the company to repay, have been granted.
For the companies, the high levels of debt that they have acquired, making repayment difficult if sales revenue are lower and margins are reduced because of increased competition, will mean that profit required to service debt may be difficult to achieve.
For employees of failed companies, there will be a very competitive job market with high levels of employment predicted. If the newly unemployed cannot get back into employment within reasonable timescales, then the knock-on effect of this unemployment not only affects the individual but the economy through further reduced demand due to reductions in their consumer spending, lost tax revenues and increase in state benefits.
Companies, the owners of companies, sole traders and their employees experiencing financial challenges and problems will need independent, relevant advice and assistance and providers such as A Safe Space will be the ideal place to turn.
The usual laws of supply and demand have been temporarily and unnaturally suspended as we potentially restart with far more companies ready to supply than the demand will require. In this situation, one of three things may happen to a business, either they will “go to the wall” as there will not be enough business to go around and those with a poor financial base will not cope, or government will continue to support the company through extended current support schemes. Whilst this may sound like a good idea, it does mean that the gap between those companies that do establish themselves strongly and the company that continue to survive with artificial support widens, or you get back into the market strong and lean as you restart in fast forward mode.