Firms with a strong digital component in their business models are more likely to be resilient after the lockdown, according to one of Oxfordshire’s business experts. In an online Q&A on the effects of the Covid-19 pandemic on business, Grant Thornton partner Wendy Hart said, “many firms are moving from crisis management mode towards looking to the future, what it will look like and what can be learnt.”
Looking ahead, she said she anticipates “more virtualisation and online activity, and firms not set up should now be thinking about how they can make their business models digital. Questions about what office space they need, whether they need to drive to meetings, and so on, have been brought into focus and slick, virtual firms will be the most resilient if this happens again.”
Hart explained how the pandemic had impacted Grant Thornton’s operation since March: “At the point of the lockdown 4,200 employees suddenly found themselves working from home. Bits of our businesses are badly affected, but what we’ve been able to do is share resources across locations. Now it doesn’t matter where people are, they can help out teams and be repurposed very quickly and efficiently. This will revolutionise the way the business operates in the coming years.”
Councillor Barry Wood, leader of Cherwell District Council said he was impressed that the council had “achieved a big change in how our back office is working, and found out that home working is much more productive than we ever thought it would be. Now the organisation is running efficiently this way and that will affect the office estate we need to keep in future.”
Also in the discussion, panel chair broadcaster Howard Bentham asked panellists to respond to reports that the Coronavirus Business Interruption Loan Scheme (CBILS) has proved complicated for firms to gain access. The scheme provides financial support to smaller businesses, through loans from lenders accredited by the British Business Bank which offer capital repayment breaks and are interest-free for the first year.
Metro Bank regional director Ashley Keen acknowledged the scheme had got off to a confused start, but updates were launching on 4 May, and they were working through through the detail: “In theory it will make the application process slicker, and access to cash quicker, which sounds great and we’re waiting for a bit more guidance from the government on how we should implement it.
“Ideally there should have been more clarity at the outset, but in a normal environment rolling out this scheme would have taken months and months. This is an unprecedented situation, so the guidance is changing. We are getting better at getting money out of the door and hopefully that will continue to evolve.”
On whether people would want to take out loans, potentially adding debt to existing debt, Isobel Bishop, partner of legal firm Knights, pointed out, “A lot of people are reluctant to take on loans because they are concerned whether they will be in a position to repay it. But something has to be done to protect business and the economy.”
Hart added, “If I were confident of servicing it I would take it, but I would have taken advantage of other things [to improve cash flow] like deferral of tax, rates and VAT beforehand.”
Bishop said that the government’s furlough, or Job Retention, scheme has been the main topic of advice to her clients, with common questions being ‘Who should we furlough?’, ‘How do we claim?’ and ‘Can you un-furlough then re-furlough employees?’ “The government has done a remarkable job in getting this out quickly, but we’ve had eight updates [since the scheme launched] and there’s a lot of uncertainty,” she said.
While Grant Thornton isn’t furloughing employees, Hart commented: “It’s probably the most significant lifeline the government has provided, in terms of buying time for employers and workers. Most SME’s we’re working with have taken advantage of it.”
On how local authorities are administering business rate relief, Cllr Wood explained that this is done automatically according to firms’ rateable values. But getting grants to small firms was more complicated because the council has to contact firms directly. He reported that 65 per cent of grants have been processed so far, amounting to £17 million.
Speculating on what the government is likely to do when the Job Retention Scheme ends in June, Bishop anticipates “[the government] will have to continue providing some support because we may undo the good that’s already been done through social distancing.” She thought the government may phase down its support or continue selective support for those hit hardest such as pubs and cinemas, adding, “It’s encouraging to see people being as positive as they are, so maybe we’ll bounce back quickly.”
On how the crisis will affect businesses in future, Keen agreed that it has “caused a massive shock and people are worried about what the future holds. There’s a realisation that we’re all in this together but yes it’s hit confidence. It will have a long lasting effect and change the way we do things when we get back to some sort of normality.”
The online event was first in a series of digital Q&A’s hosted by OxLEP exploring the pandemic’s impacts on businesses. The discussion was chaired by former BBC presenter Howard Bentham with panellists Metro Bank regional director, Ashley Keen, Knights PLC partner Isobel Bishop, Cherwell District Council leader Councillor Barry Wood and Grant Thornton partner, Wendy Hart.
Rob Panting of OxLEP explained how the Q&A’s aim to benefit regional firms: “Coronavirus has created an unprecedented situation and will cause concern and disruption to businesses of all sizes for the foreseeable future. We are determined to play our role in ensuring the county’s businesses are able to run as efficiently as possible and remain productive – our series of digital Q&As play a key role in convening business and local authority figures, as they offer insights to our business community at this vital time.”
The next OxLEP digital Q&A explores the impact of Covid-19 on Oxfordshire’s visitor economy and is on May 7 at 12 noon.