The Covid pandemic has caused an uncertain future. This is a time when it’s wise to re-think tactics and strategies. A time not to be complacent and instead plan and make some very difficult decisions. This post covers the implications of the Covid pandemic for ‘new business’.

The Economic Situation

As I write this in the UK, in early August 2020, we are in the eye of the storm. We have just emerged from lockdown with the prospect of government financial support ending and we already seeing a resurgence of the virus. The stock markets are largely in denial, propped up by governments’ money. While it might not seem so, we are probably facing a large recession with significant unemployment.

While some people, particularly those in hospitality, retail services and the arts are already feeling hardship, many people temporarily have more money as they don’t commute to work. Many jobs and businesses are being propped up by government handouts but it’s unlikely such interventions will outlast the virus. Even if they do, there’s a huge amount of debt being accumulated by governments and businesses.

Support measures are delaying the inevitable. It’s expected that there’s going to be a tsunami of job losses as companies prioritise profit over growth and, for some, survival over going into administration. This is going to create a destructive feedback loop. Job losses will cause less consumer spending that will cause cascading effects. The secondary impacts will reach industries that previously thought they would be unaffected.

While economists guess whether we will have a V-shaped recovery, U-shaped or L-shaped recovery, we know that over the last 50 years the average recession length has been about 12 months. That’s the time growth keeps being negative, not the time to recover. Businesses need to prepare for the worst case and place intelligent bets on how to allocate resources.

Streamling Your Business

It’s important not to ‘wait and see’ because changes to the economy are happening much faster than normal. The essence of survival is to arrange to be able to continue in business for at least 24 months. The 2008 recession lasted 18 months and the average recession length over the last 50 years was 12 months.

Your new plan is to balance declining sales, team morale, layoffs and cutting expenses. Cutting expenses includes areas such as office costs, ongoing services and salaries. Re-examine everything. Cash flow is important. Your customers will, most likely, delay payments and some may never pay. For new customers, stop doing credit checks and insist on cash upfront. For outstanding customer payments, offer discounts for early payment.
FirstRound has has a thought provoking quote:

Imagine it’s 18 months from now. Your company has run out of cash. What are the top five things you wish you hadn’t spent money on?

As an example, last April, at Beaconzone we re-examined everything to provide cost savings. Servers were consolidated, hosting reduced, services re-negotiated and some services cancelled that were no longer needed. Some admin functions were brought back in-house to save costs and make use of our freed-up time over lockdown. Customer credit terms for new clients and prequalification have been tightened which is expected lose us some work but we must remain cash positive. It’s fortunate that the Beaconzone way of working has always been lean and has good cashflow. We are a small company with a flexible rather than permanent workforce that comes and goes as needed. We are not venture capital based so can survive indefinitely. Since the UK lockdown ended, sales have picked up again so our cost savings were perhaps unnecessary. However, it still remains prudent to plan for the worst.


Nassim Nicolas Taleb, author of ‘The Black Swan: The Impact of the Highly Improbable’ said:

Every crisis, no matter how big, also gives rise to opportunities

While it could be argued that the Covid crisis is a white swan (expected) rather than black swan event, businesses should look at what they do to see if there’s anything that can be pivoted into something that more recession proof. Such products and services are those that are deemed essential and in the current situation might even help fight the pandemic. You might even find your existing customers are already asking for new things you don’t provide.

You might have projects that were parked as they weren’t relevant at the time. Alternatively, you might already have something that can be re-purposed and re-marketed that make more sense now.

At Beaconzone, potential customers started asking for social distancing solutions. The first one, a major construction site in the UK, was used as a development test site to evolve the requirements. We decided to create our own solution rather than creating separately for each customer. We re-used work previously performed on custom device firmware for SensorMesh™ and work done on Tally to create the CATT social distancing solution.

New Business

For some people, a crisis is the time to start a new business or new business within a business. If you are financially lean, disciplined and purposeful you can take advantage of the situation while other companies are hibernating or shutting down.

A technique to identify opportunities is to project the World forward a year or two and try to anticipate how peoples’ views and hence needs might change. Again, your newest customers can be used to gauge trends.

In our case, there’s certainly more interest in locating services in workplaces as opposed to, the more usual, factories and warehouses. What were previously seen as privacy concerns tracking people are now seen as essential for tracking room occupancy and providing for Covid health and safety. Customers that were previously just thinking about tracking are now seeing the advantages of more automated, less manual, processes.

Remember that General Motors, Burger King, CNN, Uber and Airbnb were all created in a recession. Doing new business in a recession has the advantage of better availability of staff, less competition and fosters lean working that’s an asset when you come out of recession.

The Future

Listening to large company CEO/CIOs, there has been a switch from growing profits to protecting revenue. Customers are wanting more and better digital services. The Covid pandemic is actually accelerating investment in technology infrastructure to provide for better employee and customer digital experiences. While the short term goals are ensuring workers can return to work safely and protect existing income, the longer term goals are to put systems in place to provide for better resilience (for next time!) and improve productivity.

Operations are being re-imagined to take account of what’s happened, what’s occurring now and what’s anticipated to happen. The aim is to adapt to the current adversity and emerge stronger. There will be more self service and more automation. There will be more training, re-training and up-skilling to fill the tech skills gap. Manual processes will be retired quicker than they otherwise would have been. Digitising workflows and using AI/machine learning will be used to do things faster and with a better end user experience. Successful ‘New Business’ will be part of this transformation.