Author: Ed Reid, Managing Director of The Alternative Board (UK)
As you know, I like offbeat – sometimes even moderately amusing – titles for the blog posts. Not this week: it suddenly seems too serious.
I have already forwarded notes on the Coronavirus from TAB CEO Jason Zickerman to the TAB UK community: I’m using this week’s blog to make some more personal comments – and to pose what I think are important long-term considerations.
I’ve now been writing this blog for close to ten years. In all that time I cannot think of a single subject – not Brexit, not the US/China trade dispute, not the election of Donald Trump – that has so dominated the news agenda, and had bigger potential implications for our businesses, than Coronavirus.
I started writing this on Monday morning: the newspapers headlines that day made grim reading:
Cases jump in the UK: virus cannot be stopped admits Minister
Cities will shut down in virus battle plan
Virus epidemic moving to ‘next phase’ in UK
On Monday morning there were 36 confirmed cases of Coronavirus in the UK: by the time you read this the number may well be in three figures. It’s easy to be complacent and say, ‘it’s only like flu.’ The problem is that we simply don’t know, so it’s very much a case of ‘hope for the best and plan for the worst.’
So what is the worst, and how could it affect our businesses? The worst, obviously, is that Coronavirus becomes a global pandemic and then goes on to become endemic – a disease regularly found in a population. Some of the projections are alarming – almost apocalyptic.
There is little point in speculating on how many people might become infected or might ultimately die. No-one knows and, I suspect, the actual figures may not make too much difference to how government reacts – and consequently the impact it will have on our businesses.
What will be the impact of Coronavirus on small businesses?
All the time I have been writing this blog I’ve preached a very simple mantra to business owners: If your business can’t function and survive without you then you haven’t really created a business.
Coronavirus may make a re-write necessary: If your business can’t function and survive without seeing any clients or customers then you may not have a business left.
On Monday morning, in my first draft, I wrote, ‘However many are ultimately hit by Coronavirus travel will be one of the first casualties.’ Three days on and Flybe has collapsed. I suspect it will not be the last airline casualty. Meanwhile the biggest concentrated outbreak of the virus outside China is currently in Northern Italy: the impact is already being felt on the economy of Milan and the Italian government is planning a €3.6bn stimulus package.
With travel restricted, can your small business survive?
So the first key question: with travel being potentially severely restricted, could your business survive? Does your team have the capability to work effectively and efficiently from home? And do you have systems in place to keep in touch – and hold virtual meetings – with your clients and customers?
On Wednesday the Government suggested that 1-in-5 people could be off work at the height of a Coronavirus epidemic. But if schools were to close – as has just happened in Italy – then that number would be far higher as working parents were forced to stay at home. Making sure your team can work remotely – and that you can stay in contact with your customers – is going to be absolutely essential.
How will Coronavirus impact your small business’ cash flow?
But Coronavirus may throw up a rather older problem than which video conferencing software to use. The thorny question of cash flow and getting paid.
Reports from China suggest that companies there are struggling to find workers because of the virus: they’re also struggling for cash. A report on the BBC last week stated that Chinese companies are finding it difficult to pay staff and suppliers, with the Chinese government pressing the banks to offer more credit.
Worryingly, the Chinese Association of Small and Medium Enterprises said that around 60% of its members could only cover regular payments for one to two months before running out of cash. Only 10% of SMEs could hold out for six months or longer.
As one of the oldest business mantras of them all has it, ‘Revenue is vanity, profit is sanity, but cash is king.’ The longer the Coronavirus epidemic lasts, the more true that will be.
Put simply, we’re in uncharted waters. A month from now we may be wondering what all the fuss was about: or I may be on my tenth day of self-isolation, sending the blog from my bedroom with a mask over my face.
There will unquestionably be long term consequences from any epidemic. What will happen to city centres and high streets? Coronavirus could pose a real threat to retailers and their landlords, possibly finishing off the work Amazon has started.
What about the office?
A lot of people and companies are going to find that remote working is surprisingly effective. They’re going to start questioning the needs for all those desks, meeting rooms and overheads.
The short answer is that none of us know what will happen. In 1562 the Gentlemen of the Inner Temple performed a play in front of Queen Elizabeth I. It was called The Tragedie of Gorboduc and contained the first known use of the line I used above: ‘You must hope for the best but prepare for the worst.’
All we can do is take their advice…