Guest blog: New threats to your business that will arise post-Covid-19
20 August 2021
As the economy enters a phase of recovery, businesses will need to adopt the role of a student to learn invaluable lessons about new threats likely to arise post-Covid-19. During the pandemic, businesses invested record levels in digital technology, raising industry benchmarks by years, in just a matter of months. Combined with mounting financial challenges as Covid-19 government support is set to be withdrawn, we assess how businesses will survive as new difficulties emerge.
Raised benchmarks for digital transformation
Digital transformation fast-tracked by Covid-19 transformed industry benchmarks, raising the competition between businesses, and upgrading both customer and employee expectations. The transition granted remote service access to customers and seamless working from home conditions for employees.
Digital standards embraced by businesses will force other industry players to match or exceed these levels, calling for more investment in IT infrastructures and service innovation. Could pushing technological investment to the back burner could pose a threat to businesses post-Covid-19?
Prioritising digital accessibility during a health catastrophe
Social dynamics and access to retail services were overhauled during the coronavirus pandemic, shaping the way customers purchased products, services, and resources. Stay-at-home Covid-19 instructions restricted physical access to non-essential goods, and lockdown measures blocked stores from rolling up their shutters, leaving consumers with limited browsing options other than to shop online.
Creating a landmark wave in shopper behaviour, the pandemic presented online retailers with the opportunity to promote 24/7 access and reach individuals isolating or shielding due to Covid-19. It also provided an optimum chance for retailers to upskill unseasoned online shoppers. Accelerating the shift towards digital, 75% of UK shoppers said they shopped more online compared to before the pandemic.
As we follow the roadmap out of lockdown, businesses will need to seriously review their technological benchmarks as consumers and employees alike become accustomed to new standards.
Debenhams – The latest blow to the British High Street
The case of fallen retailer, Debenhams, is a model example of a household brand being made redundant after being overtaken by online competitors. Failure to invest in their online operations contributed to the downfall of the 240-year-old business that celebrated over 150 stores across the UK at the height of its success.
Boohoo, online fast-fashion retailer, set the precedent by purchasing the Debenhams brand and its website. Boohoo set their gazes on reintroducing Debenhams to the online marketplace, rather than investing in their high street stores, illustrating the power of investing in digital transformation.
As the pandemic induced the closure of shops already grappling with poor footfall and limited cash flow, we run through the importance of executing a routine check-up on your suppliers.
Supplier check-ups – did they survive the Covid-19 storm?
The Covid-19 pandemic inflicted irreparable damage on businesses with limited cash reserves and government support to weather the storm. Weighed down by supply chain disruption, Brexit red tape, and scattered income, your suppliers may yet to recover from Covid-19 economic uncertainty. Suppliers may cope by reducing service lines and revising payment terms to streamline company operations and access cash faster.
If your supplier is in financial difficulty which may be evident due to late product delivery, operational disorganisation, and false commitments, you may be forced to question their competency and assess how this could impact your ability to deliver a reliable service to customers.
As businesses fall prey to debt loading and depend on government Covid-19 support, how will they fare when the financial help ends and debt repayments begin?
The stark reality of life after Covid-19
As businesses prepare to return to normal trading conditions following the end of the Coronavirus Job Retention Scheme (CJRS) on 30 September, they will need to urgently review their staff structure to assess if it is feasible to maintain employee wages. Although the furlough scheme subsidised a percentage of staff wages to reduce the financial burden on Covid-19 hit businesses, Covid-19 debt repayments may likely overwhelm companies at this tender stage of recovery.
Businesses bearing manageable debt levels pre-pandemic may now require an urgent financial review to address outstanding Bounce Back Loans (BBLS) and CBILs (Coronavirus Business Interruption Loan Scheme). The schemes are government-backed; however, creditors will pursue repayments in the same way as other business loans, exhausting each avenue before the government guarantee can be executed.
To overcome the next wave of threats, businesses will need to better understand their financial position and how well their business is positioned in the event of economic uncertainty. As the survival of the fittest theory comes into play, where is your position in the food chain?
About the author
Keith Tully is a Partner at Real Business Rescue, part of Begbies Traynor Group plc. and has 30 years’ experience advising directors across a range of company distress issues. Keith recently set up a dedicated Covid-19 Support group for business owners across the North West, where he is based.
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