Global trends can, and will always, have a significant effect on the wider business and economic landscape, whether it’s a trend in social change, politics or technology. But 2020 has truly redefined the word disruption. From the worst economic crash on record, to three national lockdowns, business leaders have faced unprecedented challenges.
Anyone who has run a marathon will know it becomes increasingly difficult as the race progresses — physically, mentally and emotionally. The same is true for SME bosses as they lead their teams on the road to recovery.
However, many businesses remain optimistic. According to the Vistage quarterly CEO Confidence Index, more than half (54 per cent) of UK small and mid-size enterprises (SME) are optimistic that economic conditions will improve in the next 12 months. However, this doesn’t mean that businesses can hope or expect for things to return to ‘normal’. Reboot
Few have experienced the business and personal impact of a global pandemic. For CEOs, managing the present and anticipating the future brings both uncertainty and risk.
Most CEOs have led their teams through The Pause, or Survival phase, and have already rebooted their businesses. Many have recalled furloughed workers, instituted new work environment safety protocols and some have seen revenues begin to recover. Our survey found that almost three in four (71 per cent) small businesses expect sales revenues to rise in 2021, and a similar level (68 per cent) are confident they have enough cash reserves to see them through the next six to twelve months of the year.
The next step for CEOs is to rebuild their businesses, which is different from repairing them. To repair rests on the assumption that everything will eventually return to the way it was before January 2020. The pandemic has changed human behaviour, altered markets, accelerated technology, created thirsty competitors and bruised customers.
By rebuilding, CEOs can bring their businesses’ core strengths and capabilities forward. More importantly, they can incorporate creative, innovative thinking into the future and take into account societal and market changes.
This approach is requisite not just for retaining and growing existing customers, but also for capturing customers left behind by failed or weakened competitors. It can open up opportunities for expanding a business into adjacent markets and developing new products and services based on changing customer needs. Opportunity will abound in the new reality, provided CEOs can deliver winning strategies to rebuild their businesses quickly.
Most economists and business commentators foresee a long, hard climb out from the bottom of the recession. Many are predicting that we won’t see a full economic recovery until well into 2021 or beyond. With the UK unemployment rate on an upward trend, rising to 4.5 per cent between May to August (ONS, 13 October 2020), more consumers are conserving cash and not spending, which puts a drag on the recovery.
Some economists predict increases in business activity will continue to improve and 2021 will shape up to be a strong year of growth. Others see a protracted recovery stretching into 2022 and beyond. Our survey suggests 40 per cent of UK and Ireland SMEs have said they anticipate that UK economic conditions will begin to improve in the second half of the year. Meanwhile, just over two in five (44 per cent) suggest it may take up to 12 months before seeing any significant recovery.
Making sense of these unprecedented times is challenging. Few have experienced the business and personal impact of a global pandemic. For CEOs, managing the present and anticipating the future brings both uncertainty and risk. And while we are not quite out of the woods yet, there are reasons to be optimistic.
The past year has provided an unprecedented opportunity for evaluation, change and growth in order to reboot and rebuild. We’ve seen encouraging signs that UK and Ireland SME CEOs are now ready to rebuild and remain confident that the economy will turn a positive corner this year – suggesting that leaders are recognising opportunities abound and position their businesses for success in 2021. Remember, perseverance and innovative thinking are key as businesses leaders look to stabilise and regain lost growth.