7th May 2021
See the full webinar: https://youtu.be/kzCQ9Af4KjQ
The first webinar in the second series of 4 webinars focusing on the impact of COVID-19 on SMEs was moderated by Professor Andrew Atherton (Global Director of Transnational Education at Navitas, UK). The international panel of entrepreneurs and experts was composed of:
Monica Musonda, Founder & CEO, Java Foods, Zambia, 2017 African Agribusiness Entrepreneur of the Year Award
Vivian Unt, Founder & Managing Director, Vivian Vau Shoe Salon, Tallin, a leading high fashion shoe boutique based in Estonia
Professor Gordan Lauc, Professor of Biochemistry & Molecular Biology of the University of Zagreb and CEO of Genos Ltd, a global leader in the development of the GlacanAge test based in Croatia
Caroline McKenna, CEO & Founder of Social Good Connect, an organization dedicated to building connected communities based in Scotland
Dr Raffaele Trapasso, Economist at the Centre for Entrepreneurship, SME, Regions & Cities, OECD, France
Will small businesses hunker down or will they thrive post-pandemic?
Many businesses, particularly small businesses (SMEs), have suffered as a result of the pandemic, while those that may have profited from an immediate opportunity will have to work to ensure that this converts into a sustainable business model over the longer term. Many businesses are still focused on survival, having cut costs or pivoted their business model, while the uncertainty surrounding the evolution of the pandemic continues. Against this backdrop and the inevitable psychological effect on many owner managers, we ask whether the future will witness innovation as they reframe their lives, bounce back from the negative consequences on their business or even closure? Or will a scenario characterized by retrenchment and survival unfold? The residual impact of the shocks to global supply chains and increasing nationalism may also play a part. The answers to these questions depend on many factors, including industry sector, the existing business model and the starting level of resilience of the company.
Many SME will need support to navigate their way successfully into the “new normal”
As Monica Musonda, founder of a food processing company based in Zambia pointed out, “COVID-19 is a public health disaster that morphed into an economic disaster”. It affected small businesses in many ways: employees could not come to work due to containment measures; supply chains were disrupted and raw materials unavailable; and companies were often unable to reach their customers. In essence, many businesses closed for several months. For Monica it is a question of re-thinking how we do business, especially in the case of small businesses, which in many economies make up the majority of business entities. For most SMEs to be able to take advantage of opportunities, pivot their business, or even completely change their business models, the right support will need to be put in place: this might be financial support at more favourable rates and with longer payback periods, or technical support, or access to partnerships. We all need to be smart about ensuring we can put this difficult period behind us and take advantage of opportunities.
Be small, be flexible, be innovative
Professor of Biochemistry and Molecular Biology and entrepreneur, Gordan Lauc, highlighted that although each small business will have a different story to tell, it is their flexibility and versatility which will help them to weather the storm. Gordan´s own biotech company, based in Croatia, found its activities curtailed very early on in the pandemic. An R&D intensive company, they reacted by adapting a product previously sold B2B, a biomarker of biological age, to the consumer market, thereby unlocking a new global niche that they serve via their website. According to Gordan, "every challenge is a potential opportunity to be inventive". R&D and innovation are the keys to survival. His message to other SME: “be small, be flexible, be innovative”. That said, in times of crisis, SMEs do need help, as they generally do not have significant reserves.
Caroline McKenna, based in Scotland, decided to go ahead with the launch of her business on the first day of lockdown. She observes that many companies were pushed out of their comfort zone as they took their business online, helping them not only to survive but also providing them with an additional income stream that is likely to continue post-COVID. The pandemic has forced us to be creative and innovative, sometimes in unexpected ways. Caroline also highlighted the critical importance of good leadership and people, emphasising the importance of paying attention to mental health, wellbeing and community spirit.
Personal leadership, resilience and health
Mental health became increasingly important as the pandemic unfolded, both for workers based at home and those who were still going to work. In response to the pandemic, HR policies became much more flexible in many companies. However, the psychological pressure on people during isolation in lockdown has been such that many will need continued support, and the current support available is unlikely to be enough. Purpose, meaning and a sense of control are critical components of the well-being of entrepreneurs. Given the inextricable links between the entrepreneur´s identity and his or her business, they may find themselves cut adrift as the business is forced to close.
Clearly, the personal resilience of the entrepreneur and the resilience of the business are intertwined. The outward appearance of coping may hide significant pressures. Drawing on his experience in biology, Gordan cautioned that small business owners, having been under excessive pressure for a long period of time throughout the pandemic, without space to think about themselves, may burn out and collapse when things begin to improve. It is critical for the entrepreneur to know how to rest and replenish, how to know when enough is enough.
Viviane Unt indicated she was very conscious of the need to develop strategies to maintain her mental health during the pandemic, understanding that her own resilience was key to the successful survival of her business. As she pointed out, "whatever the circumstances are, if you see yourself as a victim of them, you give your power away". Although the business has suffered, she has seen this period as one of incredible personal growth. She used the time to challenge some of her strongly held assumptions about her business. One of those assumptions was that the in-person experience of holding the shoes and trying them on was critical. Upon reflection, she has applied her know-how to creating an online shopping experience which fits her business philosophy and will be the better for this period of reflection.
SME Support must be intentional
For Monica and her company, the initial reaction was to see if they could survive in their current form. It soon became apparent that they would need to re-think and do things differently to survive as sales of one of their core brands plummeted with schools closed for six months. They found an opportunity by partnering with NGOs involved in emergency food relief. According to Monica, SMEs need help both to see and take advantage of opportunities. She calls for an “open discussion with government, key stakeholders and industry players in order to reignite the economy” and highlights the need to “be intentional about the support we give to small businesses”.
New Narratives to influence post pandemic policy making?
From a broader, international perspective, Dr Raffaele Trapasso cautioned that SMEs are extremely heterogeneous and operate in a very complex environment, suggesting that perhaps we should rethink the question the webinar posed. Many SMEs will not survive if we operate according to Darwinian principles of the survival of the fittest. Should we accept that, or do we need to develop policies that will give many of those SMEs some breathing space and allow them to regenerate? New narratives in policy making must take deliberate steps to integrate inclusion and sustainability.
Although many countries were able to provide welcome financial support to businesses early on in the pandemic, these businesses now face the huge cost of repayments, at a time where they may be attempting to pivot a second time, post-pandemic. Yet we must now think about rebuilding, not merely surviving. For SMEs that means more innovation, more entrepreneurship, better management practices, better skill sets. For policy makers that means policies that do change and improve. As Raffaele reminded us, “SMEs are a feature, not a problem of many economies”.
We must work with policymakers to adjust policies to the needs of SME in this recovery period. This may include a new “social contract” that reduces freeloading and minimizes the inefficiencies built into existing policies in order to support inclusive and sustainable small businesses, and the corporate sector must also play its part.
Looking towards the future
As the pandemic tails off globally, now is the moment to move forward and accept those changes that are likely to stay with us, while stopping to think about how to ensure we are better equipped to handle the next one. Some things, such as the community spirit that has grown out of the pandemic, should be nurtured. Business support needs to go beyond pure survival and focus on helping businesses to flourish. We must collectively improve our ability to assess risk, handle shocks and support SMEs financially in a crisis. They have been and continue to be a powerful engine of sustainable and inclusive economic growth.
Thanks go to Professor Andrew Atherton for his professional and engaging moderation, and to the breakout room facilitators. Finally, thanks to all the panellists, and the efforts of organising committee, including Dinah Bennett, Susan Frenk, Ted Fuller, Yolanda Gibb, Gay Haskins, Keith Herrmann, Andy Penaluna, Kathryn Penaluna, Jane Rindl, Slavica Singer, Mike Thomas and Marju Unt.