The pandemic has been a testing time for businesses, and it’s not over yet. However, as Covid-19 restrictions are eased and the economy begins to return to normality, now is the time for businesses to plan for the future.
 
What’s your small business recovery plan? Do you have the right commercial insurance to protect you during the Covid recovery period?
 

How has the pandemic hit small businesses?

Small businesses have really suffered during the pandemic, incurring overall losses of £126.6 billion or more according to a report from Simply Business. The hardest hit regions include London, Scotland and the North East of England. A significant majority (81%) of businesses say they have not received enough support from the government during the crisis.
 
Each business owner will have a unique story of how the pandemic has impacted them, from the challenge of adapting to remote working or social distancing, putting in place measures to keep customers safe or adapting to an online trading model. Over 80% of small business owners say the pandemic has impacted their mental health, while 61% have had serious financial concerns during the crisis.
 
The average loss for a small or medium-sized business is £15,673. With small and medium sized enterprises (SMEs) accounting for 99% of all UK businesses, this represents a heavy toll on the economy. By the end of the pandemic the average loss is expected to reach £22,461 and 8% of business owners anticipate losing over £50,000 over the course of the pandemic.
 
While some industries have experienced hardship during the pandemic, other areas have been through a period of growth. Courier services experienced an 81% increase in demand, while business for property maintenance services was up 30%. Home baking businesses grew 157% year on year, fuelled by the craze for banana bread and sourdough loaves.
 

Confidence is rising in small businesses

A recent survey by the British Chambers of Commerce in partnership with Funding Circle found that small business owners are optimistic about the future. Two thirds (63%) of firms questioned in the survey believe their company will grow over the next 12 months. A slim majority (53%) are already operating at pre-pandemic capacity, with 80% anticipating that they will be back to normal by October.
 
The levels of positivity vary by sector, with manufacturing indicating that 68% believe they will grow in the next year compared to only 58% in harder-hit sectors such as hospitality, catering and retail. The overwhelming majority (91%) of businesses anticipate being fully open by the end of 2021, with only 1% saying they will be unable to restart for the foreseeable future.
 
Barriers to businesses reopening included the risk of further lockdowns, which is a concern for four in 10 (38%) or social distancing requirements (37%). One in three (33%) have concerns about reduced customer demand, inflation pressure (18%) or recruitment difficulty (14%). Access to finance is also a key concern, with almost half (44%) saying this is essential to their recovery.
 
The removal of Covid laws on 19th July does not mean behaviour will go back to how it was before the pandemic. An important part of recovery will be gauging what you need to do to make your workers and customers feel safe, valued and respected. This applies regardless of what the law says – if social distancing and similar measures are good for your business, there is no need to discard them.
 
The end of Covid restrictions also marks the beginning of a period which could be painful for businesses, as government support begins to recede and repayment dates for loans or VAT deferrals are fast approaching, as noted by the Federation of Small Businesses (FSB). During the pandemic, the government lent £46.5 billion to 1.5 million small businesses subject to a 12-month payment holiday. Using the ‘pay as you grow’ initiative means companies can extend the term of their loans or pause repayments if needed.

How will Covid change the economy?

Covid has put the world into unfamiliar territory. Nobody knows for sure how the world economy will recover, or what the impacts will be on individual sectors or regions. However, a common theme among experts is that innovation is central to recovery.
 
As we move through fluid and changeable economic times, organisations will also have to be flexible and adaptable, for example if a new lockdown means further restrictive measures are imposed. Supply chains have been disrupted through the pandemic, with many organisations opting for less complex, more local suppliers to help cope with border closures and reduce costs associated with delays.
 
Companies have also been embracing digital technology through the pandemic. In addition to e-commerce, cloud computing has enabled organisations to work remotely. It is hard to imagine any of those developments being rolled back. Increased remote working could lead to major changes in recruitment, removing the requirement for geographic proximity between employer and employee.
 
Many small businesses that relied on footfall on UK high streets found that the pandemic has accelerated a move away from traditional retail. Before the pandemic, high street footfall dropped 10% year-on-year for seven years; between November 2019 and November 2020 it fell 45%.
 
We are likely to see local authorities developing strategies to address the changing consumer patterns, for example by repurposing town centre assets or amending local planning documents. This could also result in a shake up of business rates, to respond to the changing relationship between online and bricks-and-mortar businesses.
 

What does a business recovery plan look like?

Businesses have had to show resilience and determination to make it through the pandemic. Preparedness is an important part of resilience - the more you think through how your business would cope with possible future scenarios, the better you will be able to take whatever fortune throws at you.
 
The exact nature of a business recovery plan will vary from business to business. If your sector has been boosted by the pandemic, you might need to find a way to manage a downturn in trade, or explore ways to retain new customers attracted during the crisis.

For businesses who have experienced difficult trading conditions during the pandemic, you will need to invite your customers back, but also consider whether you want to go back to ‘business as usual’ or use the disruption as a pivot point to develop your business.
 

Key elements of a business recovery plan

1. Timeline of events

Re-opening after Covid might seem like a big blank jump into the unknown. The more you can begin to sketch out what your future will look like, the more you can start to get to work in rebuilding your business.

This might involve projected dates for when you might need additional staff, or to increase stock supplies; major events such as Christmas or other seasonal dates that are important to your business; or future dates when Covid disruption is projected to reduce further, for example the final removal of social distancing.
 
No one knows exactly what will happen in the future but the main thing is to have an idea of what could happen, so you can prepare and adapt, beginning to take back some control of your operations. You might want to plan a marketing strategy to coincide with a particular calendar event, for example.
 

1. Contingency plans if things go wrong

We’re all hoping that Covid is on its way out, but there are no guarantees. If we see further lockdowns and restrictions over the winter, how will your business cope? It’s a gloomy prospect, but you will have learned from earlier lockdowns.
 
What would you need to operate under restricted circumstances? What can you do now that would help if a lockdown comes again in a few months’ time? For example, do you need a stockpile of certain supplies?
 
There is also the risk of a vaccine-resistant variant of Covid emerging, which would be a highly disruptive development that could see the country back in lockdown. Any business plans should factor in the risk of the UK heading back to square one at some point as a worst-case scenario.
 

1. Remember there are other threats beyond the virus

Unfortunately, there are other risks to business beyond the pandemic. Adverse weather, a data security breach, a highly publicised, reputation-damaging incident – it’s a good idea to think through different scenarios that could impact your company and work out how you would address them.
 
How would you cope if your premises were closed for a period? How would you communicate with employees and customers in the event of an emergency? Who would take over if one of the business leaders fell ill? How would you cope if your premises were hit by floods and your stock ruined?
 

1. Understand where you are now

We’ve all been muddling through and coping under extremely unusual and distressing conditions. When you are making a business recovery plan, it’s worth taking the time to analyse your current situation so you know exactly where you stand. How did the pandemic impact your business?

Are there any areas that showed surprising resilience, or suggest ways you could develop and adopt your offering in future? Maybe you found ways to attract online trade more during lockdowns – how can this be sustained and built upon?

 

1. Work out how you will measure success

Businesses across the country are struggling with their finances, and it’s not realistic to imagine that the cash will come flooding in as soon as the pandemic is over. Your strategy should be about more than the bottom line; how will you measure your success? Key goals might include generating leads, increasing marketing reach, or completing tasks such as implementing new technology or becoming more sustainable. Goals should always contribute towards your key business objectives.

 

1. Review your commercial insurance

Your business risk can be reduced considerably by purchasing appropriate commercial insurance. The last thing any business needs is to be thrown off course post-pandemic by unforeseen loss – for example, a fire or claim from an employee or injured customer. In the aftermath of the pandemic you should review your commercial insurance cover to check it is a good fit for your business now.

You might need to adjust your policy if your business has changed, for example if your information security risk is increased through doing more online.

Carry out research to inform your recovery

Opening up after the pandemic is not about going back to how things were. People’s habits and preferences have changed for good, you might have had to let staff go or they might have handed in their notice during the pandemic. There is plenty of advice out there to help you get past the dazzle and shock of what’s happened and begin to rebuild.
 
For example, Deloitte’s guide on rebuilding might help to shape your plans. The guide advocates a three-step process to recover from Covid: reflecting on the impact on your business; restarting by identifying immediate actions to help your business; revitalising by taking stock of what you have learned from the crisis and finding ways to optimise or exploit opportunities.

The FSB also has lots of information and tips about recovering from Covid and moving on. This covers topics such as managing your employees’ mental and emotional health; dealing with finances; and understanding the changing requirements and expectations as the pandemic eases.
 
For information on financial and practical issues, you may also want to read the government site’s pages on business support.
 

How can you find the right commercial insurance for your needs?

Insurance cover is essential to protect your business from risks in a time when most companies are struggling.
 
Every business has a different set of characteristics, which is why Insurance Choice offers bespoke policies designed to suit your individual needs. Policies cover essentials such as:
●     Employer’s liability
●     Public and Employers’ liability
●     Product liability
●     Business interruption and loss of profits
●     Buildings, contents, materials and stock
●     Goods in transit
●     Business equipment
●     Legal expenses
 
Policies can also protect specific trades such as beauty salons, fleets, contractors, care homes, hotels, landlords, manufacturers and more.
 
Call Insurance Choice today to discuss your commercial insurance needs.

Policy benefits, features and discounts offered may very between insurance schemes or cover selected and are subject to underwriting criteria. Information contained within this article is accurate at the time of publishing but may be subject to change.