How will the coronavirus vaccine affect small businesses?

The UK vaccination programme has so far been one of the fastest in the world, providing some much needed good news for SMEs. To examine what this could mean for your business, Patrick Dormon, a Business Growth Specialist at business coaching firm ActionCoach, gives his view on the potential impact.  

Begin planning for the future

Small businesses will have been uplifted by the progress of the UK’s vaccination programme, with the adult population on course to be fully vaccinated by the end of September.

With that outlook on the horizon, together with his further announcement on the plans for the gradual lifting social restrictions, businesses can now refine their strategic plans for a return towards a form of normality for the second half of the year or risk being left behind.

Rapid return to spending

Of course, although no-one can be certain the vaccine will provide long-term protection against new variants of Covid-19 infiltrating society without some form of recurring vaccination schedule, the Bank of England has forecast a rapid recovery for the economy and a “material recovery in household spending”. The Bank predicts that the recovery in spending could be strong if consumers who have built the combined savings of over £125bn in Q4 2020 (increasing further into the first half of 2021) start spending, and it has left interest rates on hold at a record low 0.1%.

International markets will reopen at different times

The pace and success of the UK’s vaccination programme, along with other major trading nations such as the USA and the Far East, will shift the focus from EU commerce to being more global in its trade relations. If governments lift their restrictions before vaccination is widespread, a new wave of cases is likely, making it easier for vaccine-resistant variants of the virus to take hold, and the UK government will not want to risk undermining the sacrifices and endeavours that small businesses have made. 

Countries with slower vaccine rollouts will be forced to continue to have restricted borders for much longer and this may well be advantageous for Britain’s business economy, given the radically changing shape of international markets.

SMEs must continue to be agile and adapt

Whilst the pandemic has seen many small businesses suffer from restrictions to trade, many others have found new ways to pivot their sales offering as a result of the change in market needs or through an online re-positioning. Still more have seen their businesses boom from an uplift in demand within their sector or as consumers shift their purchase priorities. The success of the vaccine roll-out at least provides some equally positive opportunity for those businesses in markets such as hospitality and leisure to plan to rebuild.

It is the dynamic SME’s that systematically plan for the post-vaccine recovery that will reap the benefits. The respite between the previous lockdowns has demonstrated that overall recovery is likely to be positive and sudden. People are desperate to get back to “normality” and re-ignite the business economy, whether that be eating out, or attending events, or retail therapy, or taking a holiday break (although that might still be restricted for international travel without “vaccine passports” or isolation quarantines).

Business owners are positive about the year ahead

A recent survey of 500 SME owners, conducted by Starling Bank and the GBEA, found that an overwhelming majority (70%) felt positive about the next 12 months, buoyed by the rollout of vaccines, with more than three-quarters saying they planned to hire new staff this year. Another survey of 1400 SME’s conducted by the FSB suggested that 58% of businesses were forecasting a reduction in profitability in the first quarter of 2021, and a further survey of 267 SME manufacturers by the CBI predicted a slight decline in output over the same period. So overall this appears to endorse the expectation of a small short-term dip followed by a sharp recovery. 

The 2021 budget announcement by Rishi Sunak has broadly been seen as a giving UK business cause to be optimistic, by boosting investment and the economy rather than collecting more tax.  Most notably, however, with one in five SME’s  expecting to make redundancies once the furlough scheme ends, there is now even more pressure than ever for small businesses to accelerate their recovery to pre-Covid levels concurrently with the vaccine roll-out over the months ahead.   

Long-term cultural shifts to work and careers

There has also been a cultural shift in employment because of the pandemic that is likely to continue into the post-vaccine future.  Many employers have adapted their businesses with remote working and discovered new levels of efficiency and employee welfare benefits.  However, many employees that have children have also been impacted by having to juggle home education with their working time and this has often had a significant effect on stress levels both ways within small businesses.  

It is not impossible that the government or some employers make vaccinations mandatory as a condition of employment. And another government report has revealed that the Covid crisis has forced two-fifths of 16 to 24-year-olds in the UK to put their job or education plans on hold.  One way or another, all these cultural factors will affect the recovery planning for small businesses in 2021.

Strategic planning can help you capitalise

From a personal perspective, the focus during the pandemic has been helping business owners double-down on strategic planning.  Time and again they have been able to take advantage of competitors that “over-furloughed” or “buried their head in the sand” waiting for a recovery.  

Capturing a customer from a competitor through marketing and by providing a superior service level makes it easier than ever to accelerate growth. But that does not just happen by chance.  The common reason why businesses are being successful is because they are crystal clear on their strategy, they build strength in their teams, and they implement actions in a controlled manner.  

Most business owners spend too much time on day-to-day urgency, but now the vaccine roll-out provides small businesses an ideal opportunity to spend some quality time on what is important – taking a fresh perspective on their strategy. As Abraham Lincoln famously said, “The best way to predict the future is to create it” and now is a perfect time for small businesses to reach out and do just that.

Patrick Dormon is a Business Growth Specialist at ActionCoach, a leading business coaching company. To see how he can help your business, visit actioncoach.co.uk/coaches/patrick-dormon.

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