How has the pandemic affected your business?
It has had a dramatic impact on the business. The recruitment sector has been severely affected because we were in lockdown most of last year, which meant positions went on hold, employment offers were withdrawn, and a number of clients slowed down payments. There was a drastic reduction in revenue that impacted cash flow due to delayed payments. Lockdown resulted in furloughing most of our workforce.
To alleviate the fall-out we found there are segments of the economy that have clearly been impacted more than others. The hospitality sector, leisure, travel and retail have been massively affected. But certain businesses in our portfolio were less affected, owing to their areas of specialisation. E-commerce, technology, professional services including accountancy, finance and legal seemed to be busier than before. So we redirected resources into those sectors still able to trade to keep the business afloat, recognising that these areas were more robust than others.
Certain geographical locations, such as Asia, still saw activity, and as a lot of our UK clients had exposure there, we focused our efforts in that direction.
The pandemic taught us that we live in a global village – the world gets smaller and trading internationally becomes easier. This has been accelerated by the pandemic – it’s a global issue not regional. It’s the first time I remember the news showing cities all over the world looking exactly the same under lockdown. It gave us an understanding that trading in international markets was a strength that enabled us to find work in parts of the globe that still had activity.
You’ve been working remotely from a different country to your business headquarters for over five years. Did much change in the way that you work during the pandemic?
The one thing the pandemic has done has demonstrated that with the use of technology you truly can work almost anywhere in the world. This old-fashioned concept of having to go to the office every day is a myth of the past. I moved country nearly five years ago and while I have a conventional job in London with conventional responsibilities, due to a lifestyle choice, knowing that living in sunshine and by the sea was a better quality of life for me than living in London, I adapted to a new way of working where barriers and borders didn’t matter.
I’m more productive than I ever was, and I get more done during a working day than I ever did sitting in an office in London. There are fewer interruptions and distractions, and I’m far more focused and disciplined. Tasks are completed much quicker.
My work life today is much more regimented than it was when I was in an office. In an open-plan office I was on the phone, on the computer, walking over to people and having a chat. There are advantages to that, because direct interaction does have a value. But I get through a much higher workload in less time than I did before and my interaction with people is more structured and planned. People who work for me from home become more accountable, they have more autonomy and have a higher sense of ownership because they have no choice.
The pandemic has been so tough for SMEs. What would your advice be now that we are through the worst?
Markets have changed and your business model will have been affected so you need to look at your cost model. I reviewed the cost space of each of my businesses, which are all SMEs, stripping them down to understand what I really needed to do going forward.
The first question was, do I still need the same costs as pre-pandemic? The absolute answer was no. Do I still the same amount of office space, the same number of people, do I still need to budget for the same amount of expenditure? A lot of expenditure was travel and entertaining for my workforce. But in 2020 we spent no money on travel and entertaining. I wasn’t saying we shouldn’t spend money at all, but I knew we didn’t have to spend as much. I spent 2020 going through each of my businesses line by line to evaluate the cost space of each business, looking at every single aspect of how the business was run. I restructured and revised the cost space bringing it in line with the income stream.
That’s what SMEs should be doing. You need to understand that cash is king, that when you win a piece of work, pay enough attention to payment terms, which for us were a secondary thought.
The other thing we realised was how many people we needed - in some cases we realised that not only did we not need as many but that we could be more efficient with different people.
What do you think makes a successful SME?
What I’ve learned from the pandemic is that knowledge is power and the more specialised you are, the more successful you’ll become. SMEs need to understand what the strength of their specialism is because the more specialist you are, the more premium you can charge. People who are generalist are at threat of being replaced by technology, so the more niche you are the less likely your product will be outsourced or replaced with technology.
What are the essential skills you need when it comes to running an SME?
Lead by example. When you’re running an SME, you can’t run a business from an email –people around you have to see that you practise what you preach. As a leader of an SME, you have to demonstrate you can do the same job if not better than the people around you. You have to multi-task; you don’t have the luxury of lots of different departments and functions and the type of people you attract to work with you have got to fit that model. SMEs need people who are able to take on more than one task.
Managing an SME is a lot harder than working in a corporation. People have to be adaptable, and you can’t have people who say it isn’t in my job spec. The culture is not nine to five and in an SME, you have to be way more accountable.
Do you think it’s a good time to start a new business post-pandemic?
The pandemic will result in a lot of businesses not making it, there will be without question quite a huge fallout. But it will create opportunities and we’ve found this through recessions, adversity will create openings for a canny entrepreneur.
The pandemic will bring in a new way of working and that will create opportunities for entrepreneurs, for example creating a business on the high street that provides services.
Is it a good time? It’s the 64-million-dollar question but as long as it addresses a need in the market that’s been created through the adversity it could be a unique opportunity.
What has been your focus in the past year when it comes to your businesses?
I’ve had to get way more involved in businesses I’ve invested in than ever before. Normally I’m quite macro, but I’ve had to be micro, getting involved with a lot more detail than I’ve ever done, managing the challenges of the businesses I’ve invested and coaching and mentoring the entrepreneurs I have backed. It has taken up 12 to 14 hours a day – it hasn’t been an environment of new businesses and opportunity, it’s been focusing on what I have already, protecting that and managing that which has been the key priority.
Some have found it way harder than others, while some have adapted to change very quickly.
There is light at the end of the tunnel though. We will see a bounce and recovery and there will be light in 2022.
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