The coronavirus outbreak changed many things for businesses in the UK. One of these was the role of managers and CEOs. After months of economic slowdown many small firms are struggling not just to compete, but to survive. For mangers this necessitated taking completely new approaches. We discuss some of the things that leaders of small businesses are doing differently in this new economic landscape.
Prior to COVID-19 many small businesses were focused on expansion. One key driver of expansion was technology. At the start of 2019, a quarter of SMEs in the UK had plans to increase their investments in new technology. However, the months of forced hiatus changed the status quo. Scanning the horizon for expensive new innovations in tech is no longer the priority. Constricted cash flows have driven most SMEs to cut spending and safeguard their liquidity. The crisis proved to be somewhat of a crash courses in business accounting for managers.
Having liquid cash is a necessity, particularly during uncertain times. It enables businesses to pay back debts and take care of other obligations. Most creditors now use only liquid assets as collaterals. Many managers are actively seeking financial support from the government. By May the Office for Budget Responsibility had allocated GBP 103.6 billion to help small businesses get back on their feet. Programs such as the Coronavirus Business Interruption Loan Scheme (CBILS) gave SMEs easy access to emergency finance. The Small Business Grant Fund (SBGF) serves the same purpose. Businesses can also apply for grants under the Self-Employment Income Support Scheme.
Prior to COVID-19 managers spent much of their time on human resource (HR) tasks. These include hiring, training, coaching, and performance evaluation. The lockdowns changed workplaces in unprecedented ways. Most employees now work from home. Supervision is indirect and less involved. On-the-job training has greatly evolved. The ways in which managers conduct feedback, coaching, assessment, and quality assurance have completely changed. These functions have now become almost exclusively remote. Employee appraisals no longer occur across the table. Flexibility in HR has taken a whole new meaning. Employees no longer share a physical workspace. For organizations to accomplish team-based tasks in such an environment managers must adapt. We now require innovative thought leadership and a good bit of experimentation. Cross-training the workforce is important to ensure that the scaled-down day-to-day activities are sustained with fewer employees. Many managers are preferring temporary or contract workers. Recruitment and staffing are changing in profound ways, as are HR practices.
Many small retailers relied on walk-in customers. They paid steep rents to place themselves in high-traffic areas. This strategy has now become largely defunct. With restrictions on movement consumer behavior has changed dramatically. Even with the available freedom of movement customers now prefer contactless transactions. With changes in lifestyle and routine our shopping habits changed too. Business owners have responded with new strategies. Many firms have shifted to largely or entirely online retailing models. Most are busy optimizing their supply chains to comply with these changes.
The COVID-19 recession affected all stakeholders. Some businesses saw key suppliers go under. Some lost their biggest clients. Customer behavior is now driven by new variables. SMEs have been forced to rethink their priorities. A press release by the World Bank in April stated that small business revenues are likely to drop globally as international money transfers decline by nearly 20%. Firms are more intentional and attentive to what products and services they put out. Managers are forced to change strategies quickly.
In the current business environment owners of small and medium-sized businesses must wear several different hats. Adaptation is the key to survival. Downsizing, prioritizing, exploring new opportunities, and finding new ways to add value, are the actions in this process of adaptation.
About the author:
Hemant G is a contributing writer at Sparkwebs LLC, a Digital and Content Marketing Agency. When he’s not writing, he loves to travel, scuba dive, and watch documentaries.