How the pandemic will change the way we do business
In our latest Q&A, Andy Feeke, partner in our Manchester office, looks at the ways that COVID-19 may change the way we do business forever.
Andy, what have been the biggest impacts so far on how we do business?
For starters, the workplace already looks very different. It remains to be seen how permanent this change will be, but the big tech companies are the ones that drive workplace trends. When you have companies like Twitter coming out and effectively saying their staff can work from home forever, that’s a real statement on where things are heading.
Unsurprisingly, digital and tech businesses look set to do very well out of this as people have adapted so quickly to using technology like Microsoft Teams and Zoom. This was, of course, technology that was already around, but businesses have been forced to use it and now they’ve had a taste of what it can do they will be permanent adopters.
What does this mean for the bricks and mortar retail and property?
Bricks and mortar retail will come under ever greater pressure in the short term as people shy away from visiting stores. Over the longer term, more people are getting used to the idea of shopping online, not just for big ticket items but also for staples like food and clothing, hence I think we can expect an acceleration of online as an income stream.
It remains to be seen how the commercial property world will adapt to these events. Flexible and home working will lead many businesses to reconsider their property needs in the future. The co-working space model, which had really taken off before this pandemic, will certainly be hit in the short-term and I would expect smaller self-contained office space to be in demand again.
On the positive side, business will always need to be done somewhere, so it will be more about the commercial property market evolving and reinventing itself to survive as it has done countless times in the past.
What other trends do you anticipate?
I expect to see further adoption of ‘Industry 4.0’ as businesses look to future proof against pandemics by bringing in further automation allowing people to work further apart and potentially operating with fewer direct staff on site. Social distancing in the workplace looks set to become a permanent trend. You already have some of the big online retailers completely reconfiguring their warehouses to enable staff to keep two metres apart. Even the way we work in offices will change to some extent.
Will we see more manufacturing return to the UK?
I can see an acceleration of the re-shoring and nearshoring trend that already seemed to be underway. The difficulties the government has had in sourcing PPE, and the delays businesses in general have had in sourcing equipment and materials, leads me to think that businesses will look to have their manufacturing bases closer to the UK and that Government policy may also focus on this as a priority for certain sectors.
You look at countries like Germany, Turkey and China that have large manufacturing bases and they have had more certainty in supply of essential materials. The UK is great when it comes to ideas and IP, but we’re not currently set up to make things in sufficient volumes as we have fallen behind in the automation required to be efficient. A focus on nearshoring may be the answer to this. Yes, it will cost us more in the short term, but it will reduce lead times and bring the certainty of supply that’s vital in a post COVID-19 world.
How will the pandemic influence innovation in the UK?
The UK can innovate and adapt with the very best. Who would have thought we would have had gin distilleries making hand sanitiser, or vacuum manufacturers switching production to make ventilators, so quickly?
I think the long-term impact of COVID-19 means we’ll see more investment coming into UK tech, research and development. The UK is already one of the best funded countries outside the US for investment in starts-ups, particularly from the private equity sector, a key strength of the North West outside of London. We now have a great opportunity to encourage more innovation and we have the investment infrastructure to capitalise on it.
How should business owners react to this changing world?
I believe we’ll see even more collaboration and partnerships between businesses. Now is the time to speak to everyone you can in your sector. Speak to customers, suppliers, and industry bodies to find out what they are saying. What’s going to work and what isn’t.
Also, I think it’s about having the right attitude. Those entrepreneurial business owners that operate on a trusting long-term relationship basis are likely to do well out of this situation. Those who operate on a “it’s in the contract, pay me now” won’t do as well. People have long memories in business and loyalty is usually rewarded handsomely.
It’s a huge adjustment for everyone and my advice is to control what you can and worry less about what you can’t. On top of the operational changes, business owners will have a huge piece of risk management work to do in making their business pandemic proof. Staff contracts, employee handbooks, business insurance, terms and conditions and so on will all need to be looked at. Access as much business support as you can, not just the pandemic-specific support but any funding and grants from other sources such as the LEPs. And as always, stay close to your professional advisors.