Uncertainty, Uncertainty: UK Entrepreneurs Share Their Advice for Resilient Business
Presence of risk factors is a must in business. Small company owners in the United Kingdom have experienced the knock-on consequences of several crises in recent years, ranging from the Covid-19 outbreak to the Ukraine crisis. As the United Kingdom prepares for a potentially lengthy and deep recession, small business owners must once again plan to weather an unpredictable economic environment while seeking and hope to emerge stronger.
Adversities is new opportunities:
Seeking new possibilities is a crucial aspect of resilience during times of uncertainty. During the Covid-19 outbreak, John Tasker's event company, Massive, experienced enormous interruption, forcing him to pivot:
"Our specialty is bringing big numbers of people together in one place, which was impossible during the Covid-19 pandemic. One of our core competencies is event logistics planning, and we realised that Covid-19 testing locations are essentially long events. That labour kept the company afloat, the team together, and got us through the difficult era."
While the UK's small businesses confront a hard economic future, John advises them to find and capitalise on new opportunities provided by the shifting landscape:
"Uncertainty always leads to change, and change leads to opportunity. It's about managing and safeguarding your current business while also looking at market developments and creating methods to grow and produce new opportunities."
According to Joe Formisano, co-founder of DeliVita, resilience also entails thinking imaginatively in order to identify new revenue streams and gain a competitive advantage:
"For us, it's about thinking outside the box, finding new markets, and not only focusing on retail. We started working for construction businesses that develop lovely homes but are having difficulty selling them. We proposed installing a DeliVita pizza oven and building an outside kitchen to provide added value to customers."
Follow with intent:
As per 10,000 Small Businesses UK graduates, connecting your work to a greater sense of meaning helps to orient your firm, empower your staff, and increase your resilience. Kaye Sotomi, co-founder of Chop Chop London, believes that his key beliefs guide and shape everything his company does from the top down:
"We want to be the most inclusive haircare brand in the world and offer a service experience that represents the society we want to be a part of. 'No gender, no texture, just hair,' is our motto. It is the thing by which we lead. It has greatly aided in focusing my team's attention on why we exist and what is vital to us as a company."
As per Lisa Miller, founder of Arco Academy: "Embedding a shared purpose and vision boosts your team's resilience and drive."
"Arco's culture embodies our principles. I make certain that reminders of that culture are visible everywhere: on our website and throughout the school. When things are bad, we resort to these principles. When your 'why' is bigger than you, you wind up breaking down all kinds of boundaries. The values are what motivate and drive you."
A well established objective can serve as a reference point to keep your organisation moving in the correct direction during times of high volatility. Kate Temple Brown, co-founder of Opportunity Group, employs her North Star to quickly assess opportunities:
"We keep coming back to the question: Is this our purpose? Is this getting us to our desired destination? Are we making a difference in people's lives? And if we are, we will be able to do it."
Invest in your employees:
The current economic climate is exacerbating the UK's skills deficit, making it more difficult for businesses to attract and recruit employees. Against this context, 10,000 Small Businesses UK alumni have increased their focus on team development and building a culture of continuous learning. The Compact Group's founder, Brian Tilt, is highly focused on cultivating his people and displaying his dedication to their long-term career:
"We're really interested on growing people within the firm and helping them to advance as the business increases. It is tough to find the right people, and in these uncertain times, the most important thing is to keep them. We knew we'd grow again eventually, and we couldn't do it without you.
Sarah-Jane Butler, the creator of Farringford Legal, has been able to hire the highly qualified and experienced employees she requires by creating a more flexible, inclusive work environment:
"Many people, particularly parents, desire flexibility, and while they don't want to spend long hours at a traditional law practise, they still want to deal with clients and make a difference. They are our primary talent target since they can work 15 to 30 hours a week during school hours without being stressed. We also have persons that have retired and do not want to work full-time but want to continue assisting businesses with their legal talents and experiences."
Concentrate on what you have control over:
Inflationary pressures, market volatility, and a slowing economy are all threatening small enterprises. It's a difficult moment to be a business leader. Kaye Sotomi's overheads have risen sharply in recent months, while demand has fallen:
"My energy bills have increased by 500%. Because the rising cost of living has impacted the team, I've increased wages. In addition, my clients have less disposable income, which has lowered footfall and in-store spending."
Kaye, on the other hand, is setting the framework for future growth by focusing on what he can control:
"We can't influence all the variables happening outside us; we can only focus on things within our sphere of control. Building our community is one of my current priorities. I want to emphasise what distinguishes us from other salons, which is to exhibit the diversity of people that visit my establishments so that [possible customers] may see themselves. 'We're a community, and you're welcome here,' says the message. And, if circumstances improve, we'll bring more people back in and increase our profitability."
Sarah-Jane Butler concentrated on what she could manage during the pandemic and reviewed her overheads. It resulted in a whole different manner of working for her and her team:
"When we were released from lockdown, we took a serious look at what we might cut. That's one of the reasons we don't have a physical location; we have offices all across the country, so we can visit our clients wherever they are. It means we're not paying for overheads, and we've been able to pass on savings to our clients, which means they're paying less and are more likely to return."
Take an active part in your community.
Networks can be a significant source of support at times of extreme uncertainty. The 10,000 Small Businesses UK programme, according to Joe Formisano, has provided him with a strong problem-solving community:
"I can pick up the phone and ask, are you having this challenge? By asking the appropriate questions, I can prevent making mistakes."
According to Brian Tilt, being a part of the 10,000 Small Businesses UK community has taught him that many of the issues he has are not unique. Being able to address difficulties with other graduates has provided him with a solid sounding board:
There was always a person you could contact if you had an issue. And it's often nothing new. Everyone has encountered similar issues. It doesn't mean you have to heed everyone's advise; you do what's best for you, but having a community is extremely beneficial."
Commercials and uncertainty: This time of year reveals the best in us.
Times are harsh, but commercial lenders' ability to pivot and find solutions should not be underestimated.
In recent months, commercial lending has taken some brief, harsh knocks.
Unfortunately, the industry is not an outlier. We are not immune to the macroeconomic outlook's machinations.
Governments, central banks, wholesale funders, commercial lenders, enterprises, and even individuals have all had to realign their budgets and reassess their stomach for risk, financial sustainability, and fiscal responsibility.
In response to the inflationary surge, swap market volatility, base rate hikes, and bleak economic prospects, the picture has become complex and difficult to understand. Caution has unavoidably become a watchword and guiding guideline for everyone contemplating their household budget or a large-lending balance sheet. It's completely normal and understandable.
That is why we have seen a pullback from some of these high-profile trade creditors in recent weeks whilst they await for the rough waters to calm. Increasingly challenger banks have increased their minimum loan size, and lending to business clients with a high loan-to-value has become more challenging across the board.
What does recession says about it?
As everyone understand, uncertainty is the opposite of confident lending. So the Organisation for Economic Co-operation and Development’s (OECD) estimate that the UK economy will shrink faster than that of any other G7 countries next year doesn’t help calm fears.
According to the OECD, the UK government’s choice to spend billions of pounds to subsidise high energy prices will push up inflation and, as a result, base rates will have to follow suit in an attempt to correct the imbalance.
The Office for Budget Responsibility has also stated the UK is in recession and estimates that growth would fall by 1.4% next year. It has cautioned us to expect the biggest decrease in living standards since records began in 1956, with a 7.1% drop in real disposable income in the next two years.
Things's pointless to try to dress it up: the outlook is bleak. But, as the old adage goes, harsh times don't last, but tough people do. The industry has received some brief, harsh blows, but I am confident that we will all emerge smarter and more resilient as a result.
Among the major commercial lenders, the sector has the finance, processes, and checks and balances in place to ensure we can lend confidently and sustainably. But most importantly we have experienced and competent personnel who will bend over backwards to help borrowers and brokers locate the solution with the proper risk profile that is right for them.
Adverse market situations also give an opportunity for each of us to learn. Although unpleasant, experience with economic downturns may be beneficial in assisting the entire business in better recognising warning signals and making the necessary measures to guarantee a softer landing the next time one occurs.
Balances and checks:
There is little doubt that across the industry — retail and commercial — lenders have significantly better checks and balances in place than during the financial crisis of 2008-09, and that will hold us in good stead as we move into 2023 and beyond.
The most important thing to understand here is that market circumstances may and do change rapidly. Profitable owner-occupied businesses continue to have good high-street choices, and lower-LTV investment mortgages are available for the right asset, which should be reassuring.
Of course, certain lending products have been removed off the market. They will, however, return. The term "electronic commerce" refers to the sale of electronic goods. We've already seen swap markets begin to settle into a "new normal," and as certainty returns, I predict more product possibilities for borrowers and brokers alike.
Risk boundaries have been redrawn:
Risk lines have been redrawn, and we've all had to adjust. It is important to remember that commercial lenders are capable of pivoting and providing solutions. It is likely that brokers will notice a greater variety and innovation in the types and availability of goods in the not-so-distant future.