THE list of businesses that can now reopen after lockdown grows ever longer, but for many the route to return is far from simple. Business experts say some will require increased investment in order to operate in a similar manner to before, while social distancing means it may be time before others can turn a profit under the ‘new normal’.
Many will have no choice but to run a blended business — offering services in the same digital manner as during lockdown, as well as attempting a bricks and mortar model. Some may not want to return to the way they operated before. ‘Small businesses that have pivoted during lockdown should not look to end those pivots — not now, possibly not ever,’ says Michelle Ovens, head of Small Business Britain, which champions small businesses.
‘While lockdown is easing, it is going to take time for consumer demand and footfall to return to “normal” and some behaviours may be altered for good. Small businesses that have managed to find good alternative models should look to keep these for the foreseeable future and consider if they could make a great long-term addition to their business.’
Find your new route
The new business normal may mean a hard look at the limitations that will continue in the coming weeks, experts agree. Government guidelines for making businesses ‘Covid-safe’ may make some activities unsustainable.
Running a restaurant with a two-metre distance rule may mean you cannot have enough tables to function. Customers’ needs and expectations are likely to have changed, too. Research from cash machine network Link shows over half of consumers believe they will use cards more and cash less, even after life returns to a more normal state. Many people will have become accustomed to ordering more goods online.
Rafael Sweary, co-founder of digital platform WalkMe, says Covid-19 has accelerated the changes around digitalisation, creating a ‘complete paradigm shift’. Rafael says focus needs to be on the ‘next normal’ rather than attempting to go back to how things were, as customer habits will not revert as lockdown ends. He adds: ‘Businesses should learn from digital leaders, ones that were prepared, and saw an increase in business.’
Keep a hybrid approach
However, businesses that developed a digital offering will have many issues to consider.
Daren Moore, commercial director of accountants TaxAssist, warns: ‘Businesses that pivot their trade need to consider possible pitfalls around VAT. Starting a takeaway may involve supplying both hot and cold food to customers to eat off the premises.
‘The VAT rules are complicated and care needs to be taken. Most sales would attract VAT, some may not. Generally businesses should consider the VAT status of any new trade started to ensure they are treating income correctly.’ He says there will also be payroll issues, especially over bringing back furloughed staff.
‘As the furloughing scheme moves to its second phase, more complex claim calculations will be needed. Businesses will need to start taking on some of the cost of employment, starting with national insurance and pension costs and then building towards October, when the scheme closes.’
Michelle adds that companies must take staff problems into account. ‘Be prepared to be flexible on the roles that staff have and tailor these to their circumstances. For example, ways for those in vulnerable health categories to continue to work remotely.’
Financing your roadmap
You may need to invest more, so consider government loans. ‘These are designed to help businesses survive during lockdown and reopen as quickly as possible to get the UK economy going,’ adds Daren. ‘You may be able to approach your local council for a discretionary grant, but each council operates separately and this may be a longer process. Talk to your existing banks/funders.’
Michelle adds: ‘Sales via digital and social media, along with video service delivery, will have long-term opportunities. Diversification will be critical to building resilience and a strong recovery across small businesses.’
Carsten Kølbek, Rainmaking CEO, says the crisis will have created opportunities too. ‘Demands will have changed; new technologies will have accelerated and industry barriers blurred. For complacent companies this poses a threat to their survival. This is no time to sit tight and hope for the best. Many of the world’s best performing companies were started in a crisis, including Apple and Amazon. Now is the time for every CEO to get ahead of the game and take some risks with the possible reward of being one of the winners post the crisis.’
■ Michelle Ovens MBE, founder of Small Business Britain
■ Daren Moore, commercial director of TaxAssist Accountants
■ Carsten Kølbek, CEO of Rainmaking
■ Rafael Sweary, entrepreneur, consultant and co-founder of WalkMe
‘Lockdown changed everything overnight’
ADRIAN BALCOMBE and his brother Neil set up Single Use Alternatives last summer. The company, which offers compostable and other ‘eco’ solutions for packaging takeaway food and drinks, has been awarded £3,000 worth of advertising from Mail Metro Media. Adrian says it will make a huge difference as the company adjusts to a ‘new normal’ after the summer festivals, that make up the bulk of the firm’s customers, were cancelled.
‘We were hoping to break even at the end of this summer festivals season, but obviously lockdown changed that overnight,’ he says. ‘We discussed closing the business because, not only had our festival customers disappeared, but also our bread and butter high street customers, too. We put on hold all unnecessary expenditure, like all businesses did at the time, and have tried to mitigate all ongoing costs.’
However, they formulated a new plan, selling to cafés and restaurants that have switched to offering takeaway. ‘We have been reasonably successful in attracting new customers and encouraging our existing customers to repeat, but we desperately need more customers to survive,’ he adds. Adrian hopes the company’s roadmap out of lockdown will include both strands to the business, especially since he believes that restaurants will have to offer takeaway services for a while.
‘This is the new normal, with social distancing in place for some time,’ he says, adding that although the pandemic has taken the focus away from the problem of single-use plastic, it will still be important to customers that they do not harm the environment. The brothers aim to launch a takeaway tray that is compost- able. ‘It’s a really exciting product,’ he says.
‘The online service has brought me new customers’
Toks Aruoture is the founder of The Baby Cot Shop in London’s Chelsea. The high-end nursery business had to shut its retail space in March due to Covid-19, but Toks re-opened last Monday in line with guidance from the government.
‘I have been running an online operation,’ she explains. ‘But most people want to be able to see nursery furniture before they buy it, especially at the top end of the market.’
New customers are being encouraged to make appointments with her. ‘The process of choosing items can take a long time, and people often want to bring family members with them. It isn’t a massive space,’ Toks adds. She’s also taken out fabric panels from the toilets, installed sanitiser dispensers and social distancing measures. She will also be continuing with her online service. ‘The online service has brought me new customers,’ she says. ‘Lockdown has also resulted in other changes I’ll keep. We’ve tightened our systems and automated many of our processes.’
‘I’ll be keeping my new business model’
JOHN STONE, founder of Stone Tyres in Merseyside, set up an entirely new arm to his business in lockdown — bringing tyre fitting to people’s driveways at no extra cost.
‘I’ll be keeping the ‘at-home’ business going as we come out of lockdown, and I’m expecting to recruit more staff,’ he says.
The company had purchased several vans from the AA’s tyre fitting business, which had closed down, but was not really using them before lockdown occurred. ‘We got them fitted out and offered people the chance to book appointments online for tyre fitting,’ he said. ‘There is no extra charge and payment is contactless. It’s been a huge success.’
As well as the new business, called Gorilla Tyres, the company has also fitted out its garage so that it can operate there in a Covid-safe way.
Changes have included signage, a small seating area and the removal of vending machines. Cars will be fitted with seat, floor and steering wheel covers before they are worked on by the mechanics.
When it comes to being successful during this pandemic and beyond, John says that you have ‘got to think out of the box’. He adds: ‘You have to reassess the needs of the customers and change your business to suit.’