Rethinking the way we work and live our lives in East Anglia
Our latest survey of businesses in East Anglia shows positive signs with 60% of business owners saying they are confident in the resilience of their businesses over the next 12 months and 63% trusting the strength of the region’s economy over the same period.
It’s fair to say that the COVID-19 pandemic has immeasurably impacted the way that we work and live our lives. Whilst there have been significant challenges for businesses along the way and more on the horizon; our latest survey of businesses in East Anglia shows positive signs with 60% of business owners saying they are confident in the resilience of their businesses over the next 12 months and 63% trusting the strength of the region’s economy over the same period.
Many businesses have started to transform the way they do business, by revisiting operations, identifying efficiencies, adapting product lines and finding new ways of working. As has always been the case, economic downturns are accelerators for change.
One of the biggest challenges facing many businesses has been the speed at which they could adapt, with agility in decision making and ability to drive changes being two key factors which built resilience through the disruption. Now, businesses need to be prepared for the permanent disruption and change of customer buying behaviours, increased competition and a clear migration to digital ways of attracting and retaining customers. The most resilient businesses are those that have adapted already, with many reporting benefits and accelerated growth.
To help businesses think how they would react to change, it is helpful to think what the future could be like. Although the long term impact that COVID-19 will have on the way we do business and live our everyday lives hasn’t yet been understood, a few trends are now evident:
The role of the traditional office workplace has changed, with remote or flexible working featuring more. Our latest survey indicated that 23% of regional businesses had allowed more flexible working patterns. Will offices now become a hub reserved for innovation and social interaction? Remote working brings productivity, cost and environmental benefits which many staff will want to protect – so employers must factor this into future thinking. Alongside that though brings other considerations around motivation and employee wellbeing and businesses will need to have a focus on their people to ensure there is not a detrimental impact from this on either long term productivity or employee mental health.
The role of the urban space has changed. Since the office is no longer the default destination for commuters – how will cities, and the businesses within, adapt to the challenge of reduced footfall and increased social distancing requirements?
East Anglia’s regional strengths in emerging sectors such as life sciences and agri-tech should also provide a good opportunity for the region to recover.
Supply chains are likely to face ongoing pressure and flux as disruption to global supply arrangements and the repurposing of manufacturing capacity around the world becomes more evident. Preparing contingency plans, outsourcing or re-shoring operations, relocating production and reducing cash tied up in supply chains will remain key to future success.
Digital is here to stay, but that creates new risks and challenges. The quick shift to remote working for many businesses has put a strain on IT teams and systems, with many failing to adjust controls due to the urgency of the changes. Cyber and fraud threats will represent a growing risk, so businesses need to urgently revisit their risk register and assess the impact that working in a more digital, remote way will have.
Along with risks, these trends represent significant opportunities for businesses that use this time to rethink how the future might bring efficiency, optimisation and growth.
A Centre for Economics and Business Research (Cebr) report conducted on behalf of OpenReach in October 2019 found that that Full Fibre could provide a real boost to communities across the country and boost labour productivity by nearly £59 billion by 2025. As employers encourage staff to work from home until such time as government guidelines change, how can businesses maximise the productivity benefits arising from an agile and ‘work from home’ culture?
Examples have already seen of how businesses have adjusted include high levels of adoption of cloud based systemsfinance and accounting technology to not only enable remote working, but also give real time business information to improve decision making. Business owners are requiring more data including customer and supplier buying behaviours, real time cash forecasting, scenario (what-if) forecasting to optimise choices, and key performance indicators to give early warning of trends.
Many businesses are also redesigning their products or services, leading to high levels of innovation and the need to bring to market new ideas quickly. Access to finance through the government-backed loans and incentives has meant many businesses have been able to redesign their offerings quickly. Traditional incentives such as research and development tax credits still exist in addition to this support and shouldn’t be missed, and some of the support such as the VAT deferral will need repayment and so businesses will need to plan ahead and ensure the right funding is in place.
Other companies are also redesigning their supply chains, distribution channels and operations, outsourcing many processes to bring the benefits of reducing strain on key decision makers, increasing efficiency, and also accessing systems to expand into new markets.
What is clear is that standing still is not an option. The reality is that alongside planning for an effective economic recovery from the COVID-19 pandemic, competition and markets will shift as a result of the above and businesses also need to plan for the outcome of Brexit negotiations and a potentially protracted global recession. From a UK perspective, it remains unclear as to the fiscal and tax measures the UK government will implement to support and fund the UK’s economic recovery – and the impact this might have on growth.
Business owners need support more than ever to think through the above disruption and complex change, so our Rethink workshops model is designed to bring an external perspective and deliver challenge in a focused way to think through potential decisions and identify the steps needed to make necessary change.
Contact [email protected] to discuss how your business can benefit from our Rethink approach, or speak to your usual BDO contact.
Re-thinking the finance function of the future
COVID-19 has prompted many finance leaders to re-think their finance operating model and consider how to ‘future-proof’ the function. As businesses adapt to remote ways of working and pivoting business models – how might the transformation of your finance function support the continued success of your business?
Drawing on expertise from across BDO, we’ve curated a collection of insights, articles and downloads to support your rethink. We explore the drivers for change, map out the road to a finance and accounting transformation, offer guidance on how best to prepare for and embark on a business process improvement journey and much more.
Future proof your finance function