Business activity is starting to pick up after 18 months of disruption but what lessons have those that survived learned, what new opportunities has it brought and what new practices will businesses keep as a result?
Changes in customer and client needs?
A recently-reported development has been the numbers of staycation bookings for 2022 that are already being made after people decided to holiday in the UK in 2021 due to all the complex rules overseas travel and quarantine on return.
This presents an opportunity for the tourism industry to develop their attractions and offers, notwithstanding some of the difficulties there are in recruiting enough workers.
There may well be opportunities in other businesses in the wider economy to respond with new products and services based on what clients have asked for during the various stages of the pandemic.
Changes in ways of working
While some businesses needed to furlough staff because of a drop in demand during the pandemic others changed to a working from home (WFH) model.
This had implications both for business overheads as well as for the future of employment as many employees have indicated that they liked the WFH way of working and would like it to continue.
It has reportedly had no effect on productivity so businesses may be able to continue with employees working in this way with some additional investment in remote IT support and monitoring. This investment could be offset by businesses no longer renting or leasing large city centre office complexes and thereby saving on overheads.
In manufacturing and business processes IT is also likely to yield benefits. The introduction of robotics and AI in manufacturing is an obvious benefit after the initial investment.
Similarly automating and/or outsourcing some business processes will help to reduce overheads and improve profit margins.
Slow and steady is the key to getting back to full production
While businesses may be keen to get back to their pre-pandemic levels of activity it should not be done too quickly.
Although restoring the balance sheet is a key issue, there is always a danger of overtrading, by accepting more orders than the business can realistically fulfil. Failure to fulfil those orders can lead to problems with key suppliers the business may end up unable to pay and to reputational damage with both them and unsatisfied customers.
If there is a need for more capital to invest in the business it should be wary of both predatory lenders imposing onerous interest rates on loans and demanding directors’ guarantees. Similarly venture capital can come with problems for a business if the investor is too focused on short term returns on the investment and not willing to give the business time to grow sustainably.
Mergers and acquisitions may be a solution to business development but again should be looked at carefully before committing.
Ultimately, a business wanting to grow sustainably needs to know exactly where it is financially at all times and our free cash management tool can help you to do this.