The immediate emergency economic responses made after the Covid-19 lock down were necessary if for no other reason than calming the nerves of business owners and the markets. The enormity of the situation facing not only the UK but also the global economy was clear but now that there has been some time for reflection the immediate emergency response needs refinement and inevitably the needs of different companies will vary enormously. It is also clear, that some businesses will not survive – and in any response there is a need for prioritisation.
Running around, hair on fire, with a cheque book trying to help everyone is not an option, and a business engagement response that only involves frantically repeating the interventions laid out in Government business support schemes is not really adding value – any business successfully operating in 2020 can access and understand on-line information especially when their business survival depends on it.
There are two depressing realities that have quickly become apparent. The first is that any business that didn’t have 3 weeks free cashflow to survive the initial lockdown had limited resilience in the first place – accepting that no business would expect to lose 100% of weekly turnover overnight. The second is that micro-businesses or sole traders operating with very low levels of capital probably now face tremendous personal hardship but they, or somebody else can re-start their activity when the economy re-starts with very low levels of investment.
The stages of the crisis
It is possible to consider this crisis in stages and to begin to work through which sectors will be affected and at which different stage – remembering that even in this environment there will be both winners and losers.
The crisis is considered in 4 stages:
1. Immediate impact – it has been clear to everyone that hospitality, leisure and tourism has stopped overnight but there will be other immediate losers too – personal services and many retailers.
2. Supply chain impact – as the economy starts to re-open it is likely to be a stuttering start. The experience of Austria, Spain, Italy and others suggests that different sectors will re-start at different times. In the re-opening phase manufacturers and construction firms are likely to struggle to gain the supply of some business-critical materials and this will cause further dislocation.
opportunity to refill their pipeline during the lock down.
The conclusion that can be drawn is that recessionary pressures will be in place for some time – and sadly some of the immediate business support measures, put in place with the best of intent, will simply have provided funding to businesses unlikely to survive further worsening the financial position of the Government. Targeting support may be more time consuming but any further measures will need to back priorities rather than provide blanket support.
The priorities for any given area will differ – but at this point there is a need for economic development professionals to have absolute clarity on the sectors that provide the greatest value to their local economies. There is then a need for an understanding of which of these sectors are likely to need support and when. There is a strong argument that any interventions also target those businesses which were hitherto profitable and have significant capital investment. It is that replacement of capital that will be the most difficult to achieve post-crisis, and just a truism that businesses requiring less start-up capital can bounce back (or be replaced) more rapidly. Capital intensive businesses lost now may be lost forever.
As ever, in economic development however, analysing events and drawing conclusions is the easiest aspect of the conundrum – the challenge is what to do next.
seem. Right now, businesses are focused on preserving cash – and any business engagement in the immediate term is likely to focus on faster access to cash. Assuming that this cannot be offered in most areas of the UK, any conversation is likely to be short and terse. There is however a rare opportunity to plan. There are many aspects that could be evaluated in the next few weeks but it would seem sensible to re-visit any or all of the following:
economy and who is in their supply-chain?
services be re-purposed?
reach a new audience or create a new narrative about the activity of the town?
weeks? Can the potential business audience be defined?
as a proposition for businesses in the area?
benefit from more effectively?
These areas of activity and many others are the types of work that can be planned now and then executed more effectively after the lock down period. A failing to get some of this work underway during April-June would be a massive missed opportunity – it is this type of planning that can help build resilience in the future. After the planning comes implementation – and a re-examination of the purpose of business engagement.
conversations that seek to discover whether the business would find value in areas a such as (though there will be many more):
▪ Helping design and delivery of new events in local areas
The time for these strategic and further reaching conversations is not now – but will be more relevant in the months that follow. The identification of the opportunities now can also help define the priority audience for the future with a planned hitlist of businesses and the hook that might secure the meeting.