Chris Evans

17th July 2020


How do you bounce back even stronger than you were before?

Despite the UK government announcing further easing of lockdown restrictions, early data suggests the UK economy is set for an “incomplete V” recovery. UK businesses cannot sit back and wait for their fortunes to improve with rising economic tides. Those that set their strategic stall out early will be those most likely to face what could be a bumpy road back to “normal”.

A recent survey carried out by Plimsoll asked thousands of the UK’s leading entrepreneurs and business owners what their biggest challenges were for the next 12 months. While short term loss of sales was, of course, the biggest issue, many were also concerned about bad debts and having to shed staff. Setting the most appropriate benchmarks for your business will be crucial coming out of the pandemic.

So how do you make sure you set the right strategy to bounce back stronger? Here are the 5 key questions you must ask to make sure your business is in the best shape possible to not only survive but thrive in the immediate future:

Do we have the right amount of staff to balance growth with financial stability?

Redundancies are the ticking time bomb for the UK economy. According to latest estimates, the unemployment rate could hit 13%, particularly if a second virus wave hits later in the year.

Losing staff is never nice but it is the conversation many companies need to have. Benchmarking your sales per employee performance against your key market average and your peers is key to ensuring you can bounce back efficiently.

Of course, each sector has vastly different HR requirements. Some, such as retail, hospitality and manufacturing are highly labour intensive. Will COVID-19 bring on an acceleration of the automation seen in the past few years as companies battle for productivity in the new reality?

Maximising productivity will be the key to your bounce back strategy - how many people do you need to execute it?

Do we have too much debt on the balance sheet?

Debt is a good thing if it is used well. However, for many companies their worrisome debt was a problem that they were planning to address at a later date. The pandemic has brought that forward to now.

Many businesses are using debt to pay for day to day operations and are increasingly at the mercy of their lenders. With some sectors seeing no revenue since March, lenders will be getting increasingly nervous as the withdrawal of government support lays bare corporate frailties.

Some sectors, such as aviation or hotels, are in dire straits due to the extremely high capital cost of their business models. The debt taken on to purchase new planes still needs to be serviced when they are sitting on the ground not generating income.

Companies need to reassess how much debt they can carry in the medium term and recalibrate their model to pay down some of those liabilities or limit future ones. Is your market going to be big enough in the future to justify the level of debt in your business?

Are we generating an adequate return on our investments?

Nobody planned for a global pandemic shutting down their market. However, businesses have previously invested for growth and market share that might not exist even when the “new normal” settles down to something like the old one.

The economy is littered with spoiled business strategies. Retailing is the most obvious example of an expansionary model that failed to achieve the requisite ROI. Even Thomas Cook was a cautionary tale of expansion for the sake of it. COVID-19 has put an end to that type of strategy. 

Benchmarking your ROI against others in your core markets and pulling back from investments that are not generating requisite returns is the only strategy for many.

Are we profitable compared to others?

Generating profits in a locked-down economy has been tough, even impossible for many, but as you look to bounce back, one eye needs to be firmly set on the bottom line. Has COVID-19 provided an opportunity to pivot business models toward more stable and less perilously thin profit margins?

Notoriously low-margin industries need to review the preceding three benchmarks with a view to generating a better return from the staff, capital, and investments they employ. However, in all industries there are winners and losers. Boohoo is serving the same market as other clothing companies that have gone into administration.

Many markets will not come back in the same guise. Some will not come back at all. When benchmarking your performance against others, it is important to identify the most profitable parts of your business, maximise them and compare your outlook to other high-profit companies in your key markets.

How do we get back to growth?

Growth must form part of any medium-term strategy and companies need to prepare their strategic thinking now. Failure to prepare is preparing to fail and others will leave you behind. There are several options for growing your business:

Organic growth – the slow and steady process of good product, excellent service, and effective marketing. It is the most proven strategy but takes the longest. Do you have the time to rebuild?
Buy a rival – there has never been a more opportune time to buy distressed rivals and add them to your portfolio. But how do you avoid catching the falling knives?
Diversify – COVID-19 has forced companies from all sectors to pivot their business and service other markets. How do you make sure the new market is worth the investment?
Follow the leaders – Following the “if you can’t beat them, join them” doctrine, identify the best performers in your market and mimic them. Who is the best in your chosen markets?
Pick up customers from failed rivals – We may hit serious turbulence in the economy and more companies could fail. How do you identify those most at risk, so you are ready to pick up new business if they can no longer serve their customers?

Plimsoll can help you pull together all the answers to these 5 key strategic questions - visit to see the latest trends and developments in your key markets.