Lockdown – reflections at the end of week 6
As I sit here on the morning of May Day, my overall reflection on week 6 is how much we have got used to it and are getting on with life in the new reality. This general air of calm resignation is, of course, not universal, with the closed doors of homes, shops, factories and other businesses hiding, in places, deep problems, whether financial or personal. However, the broad sense is one of understanding the need to be patient and to sit it out while looking for the signals which will indicate, if not an end to, at least some relaxation of the lockdown.
The trends that we have seen in lockdown continue, and this week does not bring with it any significant broad initiatives from government. Furlough, loans and deferment are still the major tools available, although there are signs that the Business Interruption Loan Scheme is not being taken up by many businesses because of a fear of serviceability of an unplanned loan in the future. Whilst there have been some high profile casualties in the High Street, levels of formal insolvency remain low, but it seems almost inevitable that they will increase over the forthcoming months.
One trend that we are starting to see, however, is with businesses who are looking ahead to the post lockdown world and asking themselves questions, other than the inevitable questions about funding, about how the current position will impact on their businesses in the future. That thinking includes:
1. Where will people want to work? Many whose work has been office based will have had their first protracted taste of working from home and will have found that it suits them. It seems likely that many will want to continue to work from home and that their employers will have seen how well it can work;
2. What will offices look like? Many employers will be looking at their space and wondering whether they need so much space and how that space can best be utilised. It is almost certain that traditional models will be challenged and that organisations will be helped to move to different ways of working by the experience that they and their workforce will have had during the lockdown;
3. Will people want to travel to meetings? Many multi office organisations have already discovered that the various video conferencing services that they have been forced to adopt during the lockdown have freed up considerable amounts of time that would otherwise have been spent travelling to other offices for internal meetings and they are likely to continue to use those services rather than to travel. Equally, external meetings which are now being conducted via video conferencing are likely to carry on being conducted in that way;
4. Whilst a reduction of travelling will increase productivity and be likely to have some environmental benefits, it will challenge long established methods of selling and of maintaining business relationships, so what will become the new normal in these areas?
5. Will the lockdown experience mean that customers will want to engage with businesses in a different way? Lockdown has, of necessity, led to more remote purchasing which lends itself more strongly to the sale of pre-packaged products, whether goods or services as opposed to bespoke products or services. Businesses will need to consider the impact of this on what they do and how they do it; and
6. Once people are freer to venture from their homes, will their lockdown experience influence their buying choices? This is particularly an issue for the leisure industry and those who service it - Netflix v the cinema, YouTube fitness class v the gym, home baking v the coffee shop.
These are but a few of the questions which we are increasingly involved in with our clients and there will be many others which come to the fore either now or in the weeks to come. They demonstrate that, notwithstanding the ongoing uncertainty and significant problems that businesses are facing, there are interesting opportunities for positive change to build a resilient business for the future.
Ian Waine leads Prettys’ Corporate Services Team and has advised on a large number of corporate recovery and corporate restructuring cases over the last 30 years. He can be contacted on 07979 498817 or firstname.lastname@example.org.