How SMEs can seize opportunities and thrive | AAG Wealth Management

How SMEs can seize opportunities and thrive

Posted: November 18, 2020

How SMEs can seize opportunities and thrive

The adaptive DNA of UK small businesses helps them find opportunity in times of crisis.

When a new virus swept the globe in early 2020, no one was prepared for the fallout. Nations went into full lockdown in a bid to protect citizens, and the whole world suddenly faced the prospect of a swift and deep recession.

The UK was hit hard by the COVID-19 outbreak; as of 5 November it had registered more than 1 million cases and 47,250 deaths.1 Some industries, such as the hospitality and travel sectors, were devastated overnight as flights were grounded and venues closed indefinitely. According to data from the government, the number of employees on payrolls in June was down around 650,000 on the March level.2

Businesses large and small scrambled to adapt to the UK’s new trading environment. There were casualties – 21,000 more UK businesses failed in  March 2020 – and around a quarter of all firms ceased trading during the first two weeks of lockdown.

But where there is risk there is often opportunity. Online grocery shopping and retail, DIY stores, streaming services and medical suppliers saw a spike in sales. Many smaller companies found they had a unique advantage over corporations: they had the agility to rapidly tweak or re-engineer their business models to meet the changing needs of their customers.

“That is the major advantage of the small business; they can make a plan today and execute it tomorrow,” explains Martin Brown, Chief Executive of growth advisory firm Elephants Child, which is working with St. James’s Place to help many small and medium-sized enterprises (SMEs) survive the crisis. The ability to adapt is fundamental to a small business. “Their velocity helps them to pivot and take advantage of new opportunities, and outstrip their competitors,” says Brown.

“Whether it’s a carmaker making ventilators or a butcher teaming up with a baker to launch a delivery service, we have seen incredible innovation from the nation’s SMEs.”

A phased response 

Just as there are well-known stages of grief – denial, anger, bargaining, depression and acceptance – business leaders have typically experienced three phases of reaction to the coronavirus.

“The first phase saw many business leaders going to ground,” says Brown. “They felt overwhelmed. During the second phase, businesses were beginning to make sense of trading under lockdown and were accessing government support. In more recent months, we have seen the third phase, where leaders are seeing growth opportunities, raising money and committing to getting out of this crisis.

“Rigorous planning has been key,” he adds. “Most business leaders realised quickly that without a plan they would have to make redundancies and lose sales. Planning prevents leaders from drifting blindly into the worst outcome.”

Brown recommends all businesses operate on a rolling 90-day plan during uncertain times. “Things are changing too quickly for a three-year or even one-year business plan,” he notes. This type of planning helps to quantify and manage uncertainty, turning it into its more manageable cousin: risk.

Strong leadership 

Beyond rigorous planning, strong leadership has been critical during the crisis.

“A leader needs two things right now,” Brown says, “resilience and honesty. The first is crucial to business survival: competent leaders create positivity and drive businesses forward despite the challenging situation. Honesty is also important. This means being upfront with staff, customers, investors and stakeholders about the impact of COVID-19 on the business. Only then can leaders access the support they need to keep going.

“If you are true to yourself and your values, and do what you say you are going to do, people will engage with you and your business more readily. It’s about understanding your own concerns and frailties and allowing yourself to be vulnerable. These times have taught us that it’s okay not to have all the answers, but you need to be prepared to adapt quickly.”

How professional support can help small businesses survive – and thrive 

Whether it’s in the midst of a crisis or during happier times, professional insight and advice can benefit business owners at each stage of their journey.

For many entrepreneurs, who work intensely in their business 24/7, it’s an extension of them. They started it from scratch and bear all the scars. The pure intensity of running a business can mean they often have a one-dimensional view of it.

This is where professional insight and advice can help. St. James’s Place Entrepreneur Club and Elephants Child, for example, are able to step back to develop a holistic view of a business in order to determine what actions it needs to take to grow and develop further.

The life journey of a business can be roughly divided into four stages: getting started, early stage growth, expansion, and exit, sale or succession. At each stage, business owners will encounter new challenges and new opportunities.

Wherever business leaders are in the journey, professional support can help them identify and articulate their core strategy and aspirations, develop – and adapt – their short- and long-term operating plans, explore avenues for raising finance, increase their attractiveness to the market, and understand the options available should they want to exit.

Similarly, business owners who are laser-focused on their business might not be paying enough attention to their own finances as their personal wealth grows, which is where a St. James’s Place Partner is able to help.

Perhaps it’s a matter of figuring out how to protect the value they have built in their business, deciding whether to invest, or how to make estate planning more tax-efficient. Making sure business owners are managing their wealth can ensure the success of a business translates into long-term financial security.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief generally depends on individual circumstances.

1WHO Coronavirus Disease (COVID-19) Dashboard, updated 5 November 2020

2Labour market overview, UK, Office for National Statistics, July 2020

3“UK companies facing COVID-19 ‘pincer movement’, data shows”, Enterprise Research Centre, April 2020

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