Signs of Intent to Grow in a Post Covid-19 Business Environment
Written by Richard Coates, Managing Director, Whitecap Consulting and originally published here; https://www.whitecapconsulting.co.uk/articles/signs-of-intent-to-grow-in-a-post-covid-19-business-environment/
Amid all the distressing, highly concerning and negative daily news, there are some indicators of a desire for businesses to grow and bounce back from Coronavirus. In this blog, we reflect on the economic backdrop and look at future forecasts, as well as consider the impact on a range of market sectors.
At present, the focus is on the health of the nation and beating the Coronavirus, and of course, all our thoughts are with the amazing NHS and care workers, and with those who have experienced loss.
Also, understandably, there is lot of very concerning news around regarding the economic impact of the Coronavirus pandemic and how it will affect markets, companies and livelihoods.
Prior to the virus, the UK economy had slowed in the last quarter of 2019 as result of political uncertainty on the run-up to the General Election, with an impact on business investment and consumer confidence. Although, in early 2020, this was set to recover.
Measures to tackle the virus, and in particular the lockdown measures introduced at the of March, effectively put large segments of the economy on hold.
A recently published report by the EY Item Club stated it would take until 2023 for the economy to return to the level reached at the end of 2019 as a direct result of the crisis. The group said GDP wold fall by 6.8% in 2020, before returning to 4.5% growth in 2021 as businesses recover and consumer confidence and spending return.
Similarly, the National Institute of Economic and Social Research reported economic recovery next year, but unlikely to achieve its previous level.
No doubt there will be regularly updated, and revised economic forecasts produced as the economic impact and the cost of the government interventions become clearer.
Coronavirus has impacted organisations and markets in numerous ways. Some have been put on hold, others downsized, and some have been overwhelmed with short-term demand. During the current environment, there is an initial view forming about the markets which will do well, through to those which will likely struggle.
London based Sapio Research recently published an assessment the potential market “winners and losers in the short term”. They highlighted the potential winners as medical supply and associated services, food processing and retail, personal and healthcare, information technology, and e-commerce.
Neutral markets included agriculture, oil and gas, education and financial services. And the potential ‘losers’ included manufacturing construction, automotive, aviation and maritime, and tourism and leisure; many of which will likely experience longer-term negative impacts and will be much slower to recover, with several business failures on the way.
We all see news reports and assessments reflecting these issues and the impact on business and market sectors over the short term. Arguably, some sectors may experience a more severe negative impact such as oil and gas.
What is less clear is the long-term impact, and degree to which businesses and markets will bounce back and over what time period.
On a more positive note, there are signs that there is a desire to rebuild and grow amongst business leaders and owners. For example, a recent survey of 500 SMEs by Bibby Financial Services reported that of the respondents:
32% will grow once lockdown is over and people can return to work / the high street
19% will grow once it is clear that we are through the virus pandemic
16% have no plans for growth, just want to return to business as usual
12% think it is too early to know
10% don’t expect to grow again for the foreseeable future
7% are already planning to grow despite the virus pandemic
4% will grow as soon as government grants come through
This survey may just reflect hope; but that is very positive and will be a very valuable factor in helping to drive the recovery amongst businesses.
Also, if this growth sentiment increases as lockdown restrictions are relaxed as the health situation improves, and if this attitude extends to larger organisations, then we should all see more positive forecasts of business and economic recovery over the coming weeks and months.
We are hearing that some clients and organisations are starting to plan for the next few months, re-starting on-hold projects, reframe key priorities and also work out what has changed. Specifically, what has changed for good, and what may revert to a pre-Coronavirus normal?
We are not specialists in Covid-19, and like everyone else, we can’t say exactly how this will all unfold… but we are specialists in helping clients develop strategies in disruptive and uncertain times, and we hope that our skills and experience can benefit organisations facing unprecedented challenges.
Strategy is about working out how to go from a current position to a desired future state. As a result, we look forward to working with clients to help them get refocused and plan whether it is over a 3, 6, or 12-month period.