Bank of England chief economist Andy Haldane is urging entrepreneurs to invest in their businesses now to be in a strong position for when the Covid-19 crisis passes.
As latest figures from the Office for National Statistics reveal, business investment fell by 26.5% in the quarter to June 2020, Haldane argued in The Times that it is counter-productive for business leaders to hold back on investing in their enterprises.
His concerns are echoed in the report Post-Pandemic Economic Growth, compiled by Continuous Improvement Projects in collaboration with Middlesex University and Brunel University London and published on 8 October by the Government’s Business, Energy and Industrial Strategy Committee.
Based on a July 2020 survey of 122 businesses of different sizes from 16 different sectors, the report found business investment fell during the course of the pandemic.
One of the authors, Dr Monomita Nandy, Associate Professor of Accounting & Finance at Brunel Business School, says: “Judging by the responses, most organisations appear to be looking at ways to recover and manage what they already have.”
Many have been somewhat short-sighted and failed to “turn fear into opportunity” by investing in their own organisations, she explains. Instead, they passively rely on the government for direction, implement short-term fixes and stockpile cash, and often don’t take advantage of government financial help and low interest rates.
Surprisingly, 82% of businesses surveyed say they’re confident they’ll grow within the next two years, with digital solutions and extending flexible working cited as top post-Covid priorities. Dr Nandy says: “That’s encouraging of course, but the best strategy for surviving and achieving growth after Covid isn’t waiting until things get better but investing in your business now.
“That includes improving business operating systems, securing your supply chain and introducing new technology. Revise your business plan and operating model if necessary, ensure you have a development strategy in place and perhaps consider expanding internationally or even making acquisitions. This will put you ahead of reactive-only competitors.”
Dr Nandy adds: “Customer expectations are rapidly evolving in the crisis, so companies must be flexible to meet them. That involves much more than just implementing digital solutions though. It also means investing in people – retaining and hiring the right employees and training them to help deliver agile responses to customers’ changing needs.”
Meeting the challenge
One person who believes in investing in his business now is Steve Witt, co-founder of franchise travel company Not Just Travel, which has expanded its network of self-employed online travel advisers across the UK.
During the pandemic the company has been reinvesting business revenue into recruiting, training and supporting up to 15 new advisers every month, and now has more 750 advisers and more forward bookings on its books than ever before.
Steve explains: “We’ve remained very pro-active throughout the pandemic. We revisited our business plan, put a survival plan in place, set aside money to keep things going and, critically, determined changes we needed to make to meet the challenge.
To help the business grow during Covid, the company doubled its marketing budget and expanded its leadership team with two new positions – Chief Business Development Officer and Head of Operations and Experience.
“Given face-to-face interaction isn’t possible, we invested in new, high-quality technology to deliver virtual training and redirected support staff to assist our corporate training team,” says Steve.
Not Just Travel also brought in mind and business coaches to support employees, recognising the importance, and business value, of maintaining people’s wellbeing and mental health during this stressful time.
Steve concludes: “Since lockdown, high street travel businesses have suffered, and self-booking holidaymakers found themselves dealing with frustrating and time-consuming rebookings, refunds and cancellations.
“That puts our customer-friendly online model in pole position for the recovery – and we’re investing hard now to exploit that.”
If you are considering investing in your business or need support with any other business issues, contact your St. James’s Place Partner, who can help you explore your options.
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