Professor Stefan Allesch-Taylor CBE is a broadcaster, philanthropist, Professor of the Practice of Entrepreneurship and Fellow at King’s College London.
How do you think the pandemic will affect entrepreneurs? Is it a crisis or an opportunity?
It’s tough to avoid the obvious here. For some a crisis, for others an opportunity. But unlike most economic downturns this one is obviously different in many ways and one of which is we now have a much more knowledgeable consumer base in terms of ESG expectations as we climb out of the trough.
For those who think it’s survival of the fittest, and who are busy dusting off their unread copy of The Art of War by Tzu, Sun on their mantlepiece – take a breath.
The rules around business both written (changes in powers of creditor enforcement and employment laws) and unwritten (consumers’ attitudes) have changed.
Let’s take companies in crisis. Those business leaders need to be completely candid about their position to their creditors and stakeholders and have a reality check on their expectations regarding income recovery and growth.
This is always tough for most entrepreneurs, so finance directors sharpen your teeth, we’re all looking at you for this check and balance. For very many businesses their illiquidity is not a function of their plans misstepping or of management failure – creditors need to remember that.
Honest and frank discussions in person (albeit by phone etc.) rather than exchanging soulless emails need to be had. To the company in crisis – if you overplay your problems you’ll lose all credibility instantly and what you needed as opposed to what you wanted will evaporate and end you.
To creditors – I would say a pyrrhic victory is no victory at all, so I would avoid threatening approaches to denote you are serious from the outset. I don’t know how it will play out but leaders are going to need to be honest with each other and build real rapport to get through this. It’s harder than it sounds.
Business leaders need to be completely candid about their position to their creditors and stakeholders
For those in the ‘opportunity’ category, there are a host of challenges. From a Covid-19 viewpoint, for some companies it will be the end of the beginning, for others the beginning of the end. Things are going to change in the short and medium term, although I really believe a vaccine will be created and that will mean sentiment will change – meaning monetary values (and perception of monetary values) will move from where they may be today upwards.
However, the more subtle part of this is for entrepreneurs looking for opportunities to remember that just because you can doesn’t mean you should. According to a recent Yougov poll, 91 per cent of people do not want a return to normal – they want clean air, more wildlife and more sense of community – and yes, that includes the business community.
How can entrepreneurs use their skills to find those opportunities?
The same way they should every opportunity – understand the cost (whether it’s financial or more intangible), assess the risk and likely return, but above all research the sector. Whatever you thought you knew may have changed radically in people’s minds as a result of the pandemic. Remember, in business nothing actually has to change to screw up a plan – people just have to think it has!
How can you convince someone to invest in your idea right now, when nobody is taking any risks?
Who says no one is taking any risks? Anyone with a business seriously affected by the pandemic is probably certainly taking a greater risk than just walking away. There will always be money available for great assets and ideas – and there is today.
You convince people to invest in exactly the same way you would do pre-pandemic, only this time you need a very straight-talking section about how the pandemic may affect your plans.
Remember, right now everyone will err on the side of caution. So if you say the pandemic won’t affect your business, just keep in mind the many small moving parts of what may be a simple process for your company could easily be affected. The question is… if they are, what’s your plan to deal with it?
How can you keep your team/colleagues/collaborators motivated?
That’s a force of personality issue coupled with reality checks. I know those two powerful forces tend to make uneasy bedfellows. However, most people are nervous – some even scared – of what the future holds. A horrible end is often better than a horror without end. The anxiety of waiting for the curtain to come down on a job, or division, can make people seriously ill with stress, and this is what makes leadership skills so valuable in the current climate.
Entrepreneurs are the best-placed leaders to get the country back on its feet
If you create an environment of uninformed uncertainty, then your culture is hugely weakened, and people will start looking for alternatives or suffer from the very real effects of stress. The result may be when you need them; they won’t be there – either mentally or physically. Then a great plan could be derailed by an inability to keep the people you may know best in place to execute it.
You may think no news is good news in terms of communicating what may be going on, but not in this environment. However, business leaders aren’t magicians, if the truth is you genuinely just don’t know yet, then communicate that.
What lessons did you learn from the 2009 recession as an entrepreneur?
Too many to count and I’m pretty sure hindsight is the most useless business tool ever! However, this is not a recession – this is something none of us has ever seen before. I really don’t think many entrepreneurs will tell you that any time period has been ‘easy’.
It’s always pretty difficult until your business has real annuity-style momentum, and of course many, many sectors never do. In truth, entrepreneurs are the best-placed leaders to get the country back on its feet – perhaps more than even highly trained and respected business managers. The next few years will be about risk and how to assess it to attain growth.
In reality, we are not as Napoleon once allegedly said ‘a nation of shopkeepers’ (it was actually de Vieuzac). We are, however, a nation of SMEs – they comprise 50 per cent of our GDP and 52 per cent of our private workforce. They are the machinery of our growth, rarely making it into the business pages or limelight. It’s those who will be the real engine room of recovery.