I’ve heard this question a lot recently. My answer is simple: they won’t, at least not as we understand the ‘old’ normal.
After the Covid-19 pandemic is over – which doesn’t of course mean the virus has gone away – things, at best, will return to a ‘new’ normal that we must all start to prepare for.
Charles Darwin is credited with saying that evolution is about the ‘survival of the fittest’ whereas what he actually said is that it’s about the ‘survival of the most adaptable’. He could have been writing about coronavirus.
The businesses and communities that will recovery the quickest and prosper in future will be those that recognise, embrace and adapt to the new normal.
What does this mean for entrepreneurial small businesses? Here are some obvious conclusions:
- Entrepreneurs are, by definition, able to adapt quickly to changing circumstances and customer demands. Most of us have a way of thinking that generates new ideas and adapts existing solutions to these changes. Our creativity will be more important than ever.
- Existing businesses and jobs will be lost, many never to return. Delivery companies will thrive (and new business models created) as we realise that ‘shopping’ as we knew it is no longer necessary of efficient. We are hearing a lot about the need for businesses to pivot. What this means is that in virtually every sector business models will need to change. Those who understand the dynamics of business modelling will be in great demand.
- The retail sector will change more than most. High streets in towns that adapt the quickest will cater for a new type of shopper (think of what Shrewsbury and York have already done). Large numbers of retail stores will cease to exist as we move even more quickly to online shopping.
- Technology has proved that it can replace the need for us to herd together to run businesses; we will no longer spend 35 hours a week commuting and staring at computer screens in offices when we can do the same – and communicate just as effectively – from home. (If you doubt this consider the impact that ‘self-isolating’ is already having on pollution levels, which is one of the biggest existential threats we face).
- A shift in our collective consciousness is already taking place – we are more interdependent than we thought. We have a heightened understanding of those who are most valuable to society – and who are not. We care more. Businesses that can meet the needs of a more caring society will prosper.
- We will be more risk averse. The pandemic has brought a whole new meaning to ‘What is the worst that can happen?’ Those who are able to will save more. For those who can’t, a better safety net will need to be created. (History will condemn austerity as one of the greatest follies ever perpetrated on society by government).
- A new form of financing small businesses will be required. A lack of available capital is the single biggest reason innovative and early stage businesses fail to get off the ground and scale. (Most so-called investment in the stock market simply transfers ownership between shareholders and does nothing for the company whose shares are traded). A model similar to that introduced after WW2 when the Industrial and Commercial Finance Corporation (ICFC, later renamed 3i) was created specifically to invest directly in small businesses is necessary.
- Much of this funding will need to come from government: outdated concepts such as ‘managing the deficit’ and ‘balancing the budget’ will finally be debunked. Huge amounts of government investment – on a scale never before seen – in infrastructure, health, emergency planning and businesses – will finance future growth with taxation relegated to its role of controlling inflation rather than funding expenditure.
- The banking sector – at least the segment represented by high-street banks – which has proved itself incapable of delivering funding to businesses during the crisis, will disappear. (If it weren’t for our dependence on their back office systems this would probably have already happened). New technology – and the businesses that can supply it – will emerge.
- All these changes will have a huge impact on us as individuals and business owners (which are beyond the scope of this email). They will also present huge opportunities to businesses that can think creatively and adapt quickly. Many are currently being reactive, but it takes a very small shift – only the letter ‘c’ – to become creative. Will you be one of them?