“What will the new year bring us?” “365 opportunities!” This was the question and answer in a cartoon that was sent to me a few days ago, showing two people sitting on a hill looking into the distance. New Year’s eve this year was not so much a celebration in the normal sense so much as a “Great, 2020 is over so now let’s move on!” But the cartoon perfectly matches my own mood and that of many of my clients and other contacts.
Looking back on 2020 and learning as many lessons as possible is a very worthwhile exercise for all of us. At the beginning of this series, nearly three months ago, I paraphrased a famous quote from the Monty Python film ‘Life of Brian’, and asked “what has 2020 ever done for us?”
Businesses, and indeed stock markets, hate uncertainty. Sadly, there is no doubt that 2020 has been full of uncertainty at every stage. And whilst the main focus, for very obvious reasons, has been on Covid-19 and all the trading and other ramifications that that has brought with it, it has not been the only source of major disruption this year.
How much do you know about the Kickstart Scheme that was introduced by the Government in September 2020? If you are a startup or early stage business, my guess would probably be, not very much, but perhaps you are missing out on something that could be very good for your business.
Are you working from home? Do you enjoy it? Given a totally free choice how would you like to split your time between working from home and working in the office? These are questions facing not just many millions of people in the UK, but hundreds of millions of people worldwide.
For everyone around the world, the COVID-19 pandemic has changed many aspects of all of our lives. But what lessons have we learned about virtual verses reality? In many ways, it is those that work that have seen the largest changes. Before 2020, the chances are that if you asked your boss if you could work from home they would have come up with many reasons why it was not possible and, if you were allowed, it would only be very rarely, and you would be made to feel as though you had been given a great favour.
As we enter Lockdown 2.0 we are at least all much better prepared than we were in March when we entered Lockdown 1.0 and went into the total unknown. We are better prepared this time because we have all learned so much already this year about living and working during a pandemic and we take those lessons learned into the second lockdown.
Everything in life and business is a learning opportunity. The fact that all of us learn more, and more quickly, from our mistakes and when times are difficult, rather than when all is easy and going well, has always been known, but 2020 is certainly reminding us very forcibly of that fact.
In business, it is always important to react to changing circumstances and this has never been more true than in 2020. Regular readers will know that I have written a lot this year about adapting and pivoting but this week I wanted to look at something that can be an aspect of that but also has an impact on most other aspects of business – speed.
Communication has always been key in running a business, and indeed in most other aspects of our lives. In 2020 many lessons have been learned or reinforced and it has reminded us all how very unpredictable life can be. But one of the most obvious changes that should be apparent to all, has been in the way that companies are communicating.
The first lesson to be drawn from 2020, and undoubtedly the biggest lesson, is that the future is unpredictable. All of us in our personal and business lives try to predict the future to some extent, as this is what enables us to lay plans for the future.
As we enter the last quarter of 2020 I thought that it would be useful to take a look back at this extraordinary year and see what lessons can be learned from these truly remarkable circumstances. It has, after all, impacted on every business around the world in one way or another. Indeed, the impact has been so great that business, and the way that business is done, will never be the same again.
What qualities make an entrepreneur? What character traits are typically seen in entrepreneurs? Are these qualities and character traits something that they are born with or do they change over time? Can they be learned? Is it nature or nurture? Whatever the answers, it is certainly true that some people take to being an entrepreneur naturally whilst others would be so far out of their comfort zone that they would never even consider the idea.
Every business needs to constantly assess what it sells, to whom, and how it sells it. It also needs to constantly assess the market and its competitors, as well as attempting to forecast future trends in demand and technology. All of this is quite a task in normal times when events move in a predictable way and in a linear timescale.
One thing that every early stage business should produce is a pitch deck, whether they are looking to raise external funding or not. A pith deck is typically a 15 to 20 page very simplified business plan set out in a PowerPoint type format. Its purpose is to succinctly outline all aspects of the business to any outsider. Just like a business plan, producing a good pitch deck is a good exercise for any founder in refining the business itself, and considering all aspects clearly and objectively.
Founders typically establish a business with one of two game plans in mind. They either want a lifestyle business and one that fits their work life balance, or they want to build a business and grow it with the ultimate goal of building something of value that they can exit when the time is right for them. For any founder seeking to raise finance for their company, or to sell it, whether a lifestyle one or one with more ambitious plans, there will always be the need for a valuation.
It is often said that turnover is vanity and profit is sanity. But, even more importantly, do not forget that cash is king. Put simply, businesses fail because they do not have enough cash or other liquid assets to pay their bills or meet their immediate obligations. So, whilst increasing turnover and growing profitability are what every business owner is aiming to achieve, it is crucial to still have a very strong focus on cash flow and the levels of cash in the business.
Before any business is established the founder will of course have spotted a gap in the market, thought of the original idea, conducted research, and come up with the MVP. Taking these basic thoughts and then forming a business around them, with all the necessary steps that regular readers will now be very familiar with, does of course take considerable time and effort.
As with everything about starting a business, different people do it for different reasons, and they have different levels of ambition. Some people want it to remain a side hustle or a very modest lifestyle business whilst others have plans from day one to scale and grow it into a multi-million GBP international operation.
According to the Office for National Statistics 213,285 businesses failed in the UK in the first half of 2020, a 14% increase on the same period in the previous year. Without looking much more deeply into the numbers it is not possible to say for certain how many of those that failed were due to the coronavirus pandemic and subsequent lockdown but we would not be far wrong to say that the 14% increase, or 26,193 businesses failures were as a result of the pandemic.
