The Covid-19 pandemic and the dramatically altered commercial environment have been a shock to entrepreneurs but there are plenty of opportunities in the ‘new normal’. There are new products to be made, digital sales channels to exploit, government grants to take advantage of, and a wave of money from families who weren’t able to spend in lockdown and who had earmarked thousands for now-cancelled foreign holidays.
Perhaps the most obvious way to take advantage of these opportunities is to pivot your business model to offer something new. Consider, for example, how companies like Dyson rapidly developed new ventilator designs in the early days of the crisis. These may not now be required but demand for products like Perspex screens to protect shop workers from the virus has soared. And Hotel Chocolat increased its annual revenue by 3%1 after ramping up its online sales during lockdown, reducing the online product range and introducing pre-selected bundles so that its distribution centre could handle the surge in demand.
Graeme Quar, Entrepreneur-in-Residence at the University of Portsmouth, also helps small businesses grow and thrive through his work with business growth advisors Elephants Child. He says: “I think most good businesses are very focused. They find their market and their customer base and they exploit it well. Now, some are finding that their customer base has disappeared, so they need to sit and take stock and say ‘what have we got here, and could we use this talent or these assets in a different way?’
“If you think of a manufacturing company that carries out injection moulding. They may be making a particular mould for a particular type of product but actually, what the economy wants, is a different type of product. It may not take that much to rejig the machinery. The staff on the shop floor and the engineers have probably got the skills to adapt to do that.”
But it’s not just manufacturing companies that are pivoting their offerings. Graeme is a non-executive director of a company that operates a research laboratory that has switched its operations to meet the demand for testing linked to developing a vaccine. And while the entertainment industry is suffering, Elephants Child works with a production company that switched to filming broadcasts for social media platform TikTok when the crisis caused normal production to stop.
Sales is another important area where companies can modify what they do to improve their performance through the pandemic. Graeme says that salesmen and women who used to getting in their cars for face-to-face meetings need to learn to sell on Zoom. One business he is involved in was used to picking up leads by attending exhibitions. Yet its sales are improving without a sales rep on the road because it has adapted to working online.
“I also have a business friend who owns vape shops,” he says. Rapidly he’s gone from zero to 32 units in two-and-a-half years. He had already begun wondering how efficient the shops were and whether he should build up his online business. But he said he would never have dared to close down every single unit to test out the online market, but the government made him do it. And, of course, he’s discovered that online sales are really quite interesting.”
And companies shouldn’t overlook the opportunities offered by ongoing government support. It has been keen to help small businesses through the crisis and Innovate UK has already handed out £210 million2 in continuity grants to businesses it was supporting prior to the crisis and has several other support packages.
Graeme adds: “I’m also the NED of an R&D business. It actually has no customers because it is still developing the product but we managed to raise additional funding through Innovate UK. Because of Covid, the government has been handing more money out more quickly and that has accelerated our development process. We won’t be going to market for another year but we’ve actually recruited.”
And while there are many ways to pivot or accelerate your offering, you should do your research carefully because many consumers currently have a lot of money to spend. Graeme points to the opportunity offered by the pent-up demand from families stuck at home for months and forced to abandon their summer holidays, and the need to meet their demands. He says: “That £5,000 trip to Disney has been cancelled, so what are we going to do with the money? Builders are getting busy, for example, because we are spending our money on new kitchens or extensions.”
The Government has also inspired consumers to spend, perhaps most notably through its Eat Out to Help Out scheme but also through a temporary reduction in Stamp Duty Land Tax, which is helping to revive the housing market.
Martin Brown, CEO of Elephants Child, explains: “My sense is that there is an opportunity for the vast majority of SMEs, if they are prepared to step back and think and get their strategy and their plan right.”
If you need help to adapt to the ‘new normal’ talk to your St. James’s Place Partner.
The opinions expressed by third parties are their own and not necessarily shared by St. James’s Place Wealth Management.