Mark Sykes, head of entrepreneurial business at accountancy firm BDO looks back at 2020 and the COVID-19 pandemic and assesses the huge impact on the business world
The year 2020 will be remembered as an extremely tumultuous year for business leaders, not only in the UK, but across the world.
However, by their very essence business leaders are tenacious, positive in their outlook, and always using negative experiences as learning opportunities to take their business forward into the future.
But there is significant pressure on business owners at the moment to make the right decisions in quick time, which cannot occur without carving out some clear headspace – it otherwise becomes detrimental to their long-term success.
So, what did we learn from the fall-out of 2020? Below, we look at some of the key learnings entrepreneurs may want to take from the events of 2020:
What a real ‘Black Swan’ moment actually is
In his best-selling book of 2007, The Black Swan: The Impact of The Highly Improbable, Nassim Nicholas Taleb developed his theory of the Black Swan event:
“…an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterised by their extreme rarity, severe impact, and the widespread insistence they were obvious in hindsight.”
Fast forward to 2021 and this will sound chillingly familiar to almost every inhabitant of planet Earth, let alone business leaders.
The COVID-19 pandemic certainly took world markets by surprise. Although catastrophic in its impact, it’s been a valuable lesson for business leaders in the fragility of their place in local and global markets, and shocked many into considering how they can better prepare and operate in a vastly altered business landscape.
In fact, the pandemic has perhaps been the event that has caused many businesses leaders to make a long overdue reappraisal of their business, to explore how to make it more resilient and sustainable and really look at their business model which they may have otherwise kicked into the long grass in less turbulent times.
The vital need for the right technology
One of those vital decisions that many business leaders may have put off for some time, is the updating vital digital infrastructure. However, as we’ve seen during the pandemic, those businesses that have been able to support remote working have done well.
Those with up-to-date digital infrastructure that can service internal and customer needs, are the ones that have weathered the COVID storm the best.
At the most extreme end of the scale, we’ve seen tech behemoths like Google, Apple and Amazon actually thrive in turbulent circumstances. However, for those who can’t operate remotely, the pandemic may have shown that now is time to rethink how they do business.
Put simply, it’s no longer enough to ‘get by’ when it comes to having the right technology and digital tools in place to run business operations.
The gap that technology can fill in current circumstances is highlighted in a recent survey BDO conducted with business leaders in the North West as part of its Rethinking the Economy.
The research found that 50% of businesses will be investing in technology in the next six months to support people working remotely, with a further 47% making the investment to increase business efficiency. The national average for this type of investment is only 30%, this seeing the North West firmly focused on the future.
It’s important that all businesses regardless of their size, shape or sector think carefully about the technology and digital tools shaping their industry now and in the future. 2020 has accelerated the gap between the ‘haves’ and ‘have nots’ in the context of technology, and this is only set to widen in the coming years.
Implementing and investing in technology needs to be a matter of strategic importance for all businesses – particularly when planning their future.
Know your market and focus on retaining clients and sourcing growth
2020 was the year that consumer loyalty went out of the window. In research conducted by Braze in its The Future of Retail: Opportunities for Brands in the New Normal report, 94% of UK shoppers said they would switch to a competitor if they didn’t agree with a brands response to the pandemic.
In addition, 97% of consumers that have tried a new brand in lockdown said they would buy from the same brand again.
As a result, businesses need to know their customers like never before. In the new global market (one still struggling to cope with the pandemic), brands need to not only meet consumer needs but look at ways to exceed them where possible to keep brand loyalty.
It is also important to remember your client needs will change too, and keeping close and listening to them will ensure your services remain relevant into the future. The ability to do this will pay dividends in the long term when it comes to winning new customers over at a time when many are struggling to retain buyers and clients.
At a time when budgets are being squeezed daily, investment in market research and communication can seem easy to cut. However, it’s these two business functions that could actually play a key role in customer retention and growth.
Again, technology also has a key role to play in meeting and exceeding customer needs – particularly when it comes to tracking orders, bringing efficiency to operations or communicating better with customers on a daily basis.
The importance of head space
Ask any business leader what they’ve being do most of in the last year and I expect many will say “firefighting” – ie, trying to keep their business afloat and save their workforce from redundancy.
As we’re still not out of the woods when it comes to the pandemic, and with the UK’s fledgling status as a wholly independent trading bloc yet to fully extend its wings on the world stage, there’s a lot of thinking and decisions for our business leaders still to make.
Speaking to the businesses BDO works with, we know that many leaders have talked to us about ‘decision fatigue’ – a state of mind that comes as the result of making vital business decisions on a weekly, daily, and in some cases, hourly basis.
If 2020 has taught us anything, it’s that every now and again, a business leader needs to step back and assess what they can control; what decisions are actually mission critical to the future of their business; and what decisions can be shelved in order to create headspace.
In fact, out of all of the lessons we’ve looked at above, it’s this one that is perhaps the most important and can allow entrepreneurs to take the right decisions at the right time with a better sense of perspective.
Looking to the future – 2021 and beyond
Taking the positives from a bad situation is in the DNA of every successful business leader – if they didn’t take this attitude then they wouldn’t be doing what they’re currently doing.
The ability to adapt and demonstrate agility has been the differentiator between survival and failure and, even if you have not adjusted, it is almost certain that your competition, your customers and your markets will have changed.
As we’ve seen there have been some valuable lessons to be learnt from 2020 – ones that will hopefully inform decisions being made in 2021 and beyond.
To find out more or sign up to take part in Growth Platform’s free Business Resilience Programme for Liverpool City Region based businesses, click here.