Companies founded in the pandemic now folding
Every crisis carries its opportunities, or so the saying goes. This is true, and there were certainly some savvy entrepreneurs during the height of the Covid pandemic who spotted a gap in the market and made lots of money. These businesses didn’t even need to provide a product or service that was related to the health crisis—some businesses boomed after identifying ways that people could pass the time whilst on furlough, e.g. new hobbies that could be practised at home, products that met the demand to keep fit at home, etc.
The thing is, time moves on. Within just a couple of years, the demands of the pandemic have given way to needs associated with another issue, namely the cost-of-living crisis. Spending money on an expensive, multi-feature exercise bike may not have been much of an issue for people when the economy was relatively robust and furlough money was being paid into their bank account every month. Asking the same of consumers now, though, where even the ‘well off’ are having to justify their outgoings (some even cutting back to essential spending only), requires a different tactic. It also demands a level of resilience within the business, to either diversify into new lines that are of demand in today’s market or to strip the company to its barest operating costs in the hope you can ride the recession out.
For many newer business owners, this will be unchartered territory. Being able to spot a gap in one market doesn’t necessarily mean you will be able to pivot into new ones when consumer demand alters and make another killing. Resilience isn’t necessarily inherent—it’s a trait that is typically =learned (more often that not, the hard way).
A lack of resilience and experience could be reasons why more than half of the ‘pandemic businesses’ recently surveyed by accounting software firm Sage admitted that they’re considering giving up altogether. Some businesses can be viable in all weathers, 365 days a year, and appeal to huge numbers of diverse audiences.
Others can’t, and if your business stemmed from a niche idea cultivated by the pandemic, you may find that it’s no longer viable now.
With energy costs rising exponentially, anyone with business premises will be greatly affected. They will still have to pay rent, rates and energy bills to open their doors, yet they may only see a small proportion of their usual customer base step over their threshold. Higher costs and fewer customers…a business can’t carry on in this manner indefinitely.
The businesses that have been round the block a few times may know how they can weather the storm. Some retailers are planning to give up their shop premises to trade at markets, for example. There are pros and cons to such a move:
Cons: Customers may not wish to attend said market for items; markets are not the nicest environments for traders in bad weather; there’s a limit to the amount of stock that can be sold on a market stall; products need unpacking and packing away every single time the owner trades
Pros: Bar the stall fee and possibly petrol, which are minimal costs in comparison to those mentioned above, the remaining revenue will be gross profit; the business can easily visit other areas and access new audiences; the stress of meeting huge bills with a reduced turnover is relieved; market trading can be dialled up or down, depending on opportunity and the owner’s preference.
Other industries may be forced to slim down their workforce, to develop new product ranges, to borrow funds until the crisis recedes, to sell their assets, etc. It stands to reason that, if you’ve seen a handful of crises and recessions, the current pickle we’re in may not faze you as much as someone who has only been trading for a couple of years in one climate.
Resilience is a wonderful trait for any business or entrepreneur to have. It can naturally form in business owners and entrepreneurs over time, once they’ve experienced a few periods of feast and famine, but it’s also a great skill to develop in any individual.
It’s unfortunate that we’ve swung straight out of one crisis into another, but there’s not much any of us can do about that—we can only control the running of our businesses and the products/services we offer.
During the height of the Covid pandemic, Novus was forced to pivot and adapt. As we’re a marketing agency, and following what typically happens when businesses tighten their belts (not that we think dropping your marketing strategy is the way to go in a crisis), our work sheet dropped off practically overnight. We had to diversify and add a couple of new income streams to pay the bills until businesses began to budget for their marketing once again.
We’re not saying that the coming months (or years) won’t be bumpy for Novus, because they’re bound to be; however, we’ve weathered a few storms now and come out the other side having grown a little more as an enterprise, increasing both our turnover and the size of our team. This resilience and being able to adapt to current challenges will hopefully see us right.