Week 7 of the COVID-19 crisis brings the opportunity to make business plans
Posted on 05/05/2020
By Michael Kianfar
As we enter week seven of the COVID-19 crisis, let’s take the opportunity to see where we are with trying to keep our businesses alive and start to make some plans for the economy to be.
Our prime minister has stated that he is going to say something about what measures he is going to put in place to open parts of the economy. The tone of this message was predictable, after all how do you make an announcement and say nothing?
The press then picked-up on the potential of the lockdown ending and we started seeing various poles from the like of MORI that predicted that 60% of people would be nervous of going out, going back to work or sending their kids to school. I believe this is going to be the backdrop of the narrative that we have heard many times before.
Here are my predictions as to what is going to happen next and I will summarise with a set of financing/strategy actions in case they are of use.
- You are an entrepreneur – as an owner of an SME, start to get used to being referred to as an entrepreneur by just about all policy makers. This is important for what’s about to come out next.
- Limited guidance from government on lockdown – the government will start to outline some policies that could be unworkable for some industries. Things like, you can go to work but you must not be closer than 2m to anyone else.
- Furlough and general business support will end – once we get past June, the government may extend the furlough plan for another couple of months, but I seriously doubt it. The cost is staggering.
- Shifting responsibility to you – as an employer you will be hit with numerous hoops to jump through to protect staff at work. There will be form filling as local authorities will potentially be mandated to recruit health and safety inspectors.
- Suck it up because you are entrepreneur – as you know many people think the definition of an entrepreneur is a risk taker (it’s not but let’s not worry about that right now) and you will be told that going through this hell was what you signed-up for by being an entrepreneur.
- Life will go back to normal very quickly -forget the MORI poll because I am confident that the questions weren’t asked correctly. ‘Are you concerned about leaving your house and going to work?’ or should it have been ‘the furlough plan has ended and that means if you don’t go to work you are not going to get paid. Now how do you feel?
- Massive layoffs – There will be thousands of redundancies because the government will announce legislation to protect staff (voters) and they will put huge responsibilities on employers. The big boys will comply because they have the huge CBIL loans, access to the capital markets and fat balance sheets. Also, the CEO (who typically gets a £1m+ salary) will champion these measures because:
- It does not affect his pay
- Makes him look good to all his staff
- Knows that the measures put most of his SME competitors out of business.
So, if you agree with this perspective, what should we do next?
I have outlined below a set of steps that you should consider. You could also consider to pack-it all in and start day-trading the markets instead!
- Simplify your business and learn to collaborate – if you were producing onions and potatoes, focus on just one and work with a competitor who can do the opposite to you. Less complexity means greater efficiency and much greater operational control.
- Automate as much as possible – you can get access to CBIL loans and even though they are small for SMEs, there is opportunity to use them to finance CAPEX.
- Build business intelligence – you can get access to some very smart developers around the globe for small amounts of money. Use them to build databases that enable to you to track and predict all aspects of your business.
- Control it – following from the above, get management control into your own hands and create for yourself a smart daily dashboard that flags all stress points for your business.
- Cut overheads – build a process that enables you to create with much less overhead. Stop the long-term thinking and building new revenue lines. Now is not the time for this. Focus, Focus, Focus.