April 2020 saw wave after wave of sobering news reports, from the Prime Minister’s health to the lack of PPE for frontline workers to the cancellation of the last few sporting events left on our summer calendar. But for business owners, one in particular is likely to cause sleepless nights. At the beginning of the month, the British Chambers of Commerce released its first Covid-19 Business Impact Tracker, in which it revealed that 44 per cent of UK businesses have less than three months’ worth of cash in reserve.
With the economy predicted to be hit hard by the pandemic – a March 2020 report by KPMG sets out a downside scenario in which UK GDP contracts by 5.4 per cent in 2020 – what, if anything, can businesses do to survive? And how can entrepreneurs mitigate the impact this black swan event will have on not only their business but their own mental health as the stress of shrinking cash reserves plays on their minds?
Pivot and pare down
Julie Devonshire, Director of the Entrepreneurship Institute at Kings College London, believes that many entrepreneurs have the skills and mindset to emerge from the crisis stronger.
“We’ve already seen so much entrepreneurial behaviour,” she says. “People using their skills to solve problems, learning to innovate, working in diverse teams to increase the supply of essential items like face masks, scrubs and ventilators. You only have to walk down your local high street to see businesses working on their Revenue 2.0 models, pivoting to keep things ticking over. The catering trade, with the widespread move to takeaway and online delivery, is a classic example.”
Even if repurposing your business to sell fresh produce online or manufacture PPE isn’t possible, there’s still a great deal entrepreneurs can do to weather this storm, says leading entrepreneur, investor and technologist David Walsh, who is now Entrepreneur in Residence at the Institute.
“We’ve experienced downturns as severe as this before, and if you can get through it you will be a stronger business,” he says. “For most small businesses, a little money goes a long way, and it’s possible to make progress, albeit modestly. You’ve got to cut costs and look for ways of bringing revenue in. You’ve got to communicate clearly, accurately and respectfully with your clients, suppliers and banks to find a way to work together.”
Once a business has assessed its eligibility for government funding and put in place a cash flow plan and a vision for its return to normality, Julie says, there is an opportunity to look at what you can do in the meantime.
“Can you do other things with your brand and your business?” she asks. “For example, smarten up your premises, work on your brand, accelerate your digitisation, build in e-commerce or grow your online community?”
Julie cites the example of the author and influencer Joe Wicks, who has used the crisis to send his already strong brand supernova by offering free physical training sessions on YouTube, aimed at families in lockdown.
“His brand has just exploded. He’s done an amazing, entrepreneurial thing to support others and his business will be far better after this crisis,” she says. “If you can’t do anything about revenue now, you can still build your business for the future. Many businesses forget how much you can do with very little and how much you can achieve by being lean and agile. You don’t need £30,000 to build a website, develop an online community and amass a social media following. And we all have time for that now.”
Don’t worry, be happy
Of concern to many entrepreneurs is the drying-up of investment funding following the crisis. In early April, the tech community launched the Save our Start-ups campaign – which resulted in a £1bn equity-based liquidity package from the government to rescue at-risk start-ups – and businesses in other sectors looking for investment face tough decisions too.
“Investors are not necessarily looking for new investments, but they are keen to keep those they’ve already funded running,” David says. “But there are still funds out there looking, and amazing opportunities in sectors that are not impacted by the crisis. It’s important at times like this that investors show leadership, act positively and stick together.”
Even if cash-flow worries are mounting up, Julie emphasises the importance of maintaining perspective.
“Resilience is vital for entrepreneurs,” she says. “This is an opportunity to understand where your levels of resilience lie and try to improve them. People keep returning to this being about more than business: people’s health, families and happiness are most important, and that helps them to focus on practical things they can do to help get through this. And we will – a vaccine will come, lockdown will end. One way or another, this is temporary.”
David emphasises the importance of ethical behaviour by businesses during times of crisis. “I have seen poor behaviour from some landlords and banks. But when we come out of this, there will be those who can hold their heads high and say they did the right thing. The real test is what we do to help one another, and how we can emerge from this leaner, fitter and more resilient so we can look back and say we had a good Covid crisis.”