Livingston James organised a virtual round table to discuss the challenges facing different business leaders within the wider farming, fishing, food and drink sectors.
The forum was based around three questions and the input was constructive and lively with some positive messages for all those also trying to drive continuity and sustainability. Here we look at the questions posed and share some insights raised from the responses received.
What are the key challenges affecting your business?
Nobody needed to state COVID 19. That was a given. The main factor has been the reduction in demand or, where demand is still high, the breakdown in the supply chain. In manufacturing and production there are tight restrictions on how the workforce must be managed which restricts the ability to produce, combined with an understandable increase in staff absence affecting shift management. How do businesses manage cash and retain staff when there is no clear end date? Who should you furlough and who should you make redundant?
Another complication has been the mixed messages from Whitehall and the Scottish Government. Sometimes one contradicts the other (is whisky production a key industry? Who needs to travel for work? Why are grants only being offered one per rateable business in Scotland yet one per rateable property in England?). We need clarity more than ever in these difficult times.
Finally controlling capital expenditure is key to ensure that business can stretch their resource to cover the longer than initially expected downturn.
What continuity solutions are being implemented and how effective have they been?
The Government furlough scheme was universally acknowledged as a great concept which allowed business to make instant expenditure savings, keep their employees engaged and provide an element of security for the future. As it was backdated to the start of March there is concerns that come the end of May some very tough decision will have to be made if it is not extended. There was also a strong understanding that it could not go on forever.
Internal and external communication have improved across all sectors. The unknown is far more frightening than the known so keeping employees regularly updated helps them understand businessdecisions and support the journey.
Much longer-term cash management and more stringent fiscal control has coincided with better business planning and revised strategies. Some sectors saw short terms sales spikes but know that their products are ‘long life’ so this will be a short upturn.
Sometimes, tough decisions are being made. The likelihood is they would have been made anyway but have been hastened by the economic downturn. Raising investment is difficult at the lower end of the market where angel syndicates are not so willing to take risk currently, although larger investors are seeing this as a chance to broaden their portfolio.
How easy has it been to access relevant government support?
There was universal agreement that the Government has performed admirably in trying to create workable solutions that create jobs and protect businesses, especially since such interventions usually take years of planning, but also acknowledgement that they are a work in process.
As already highlighted the issue with furlough is how long it lasts. The Government grant scheme is another positive plan but has proved difficult to access with plenty of criticism being levelled at the banks. It was noted that much of this is because there was not initial clarity of the lending rules and that in fact the banks are now engaging more positively as they understand the guarantees. There are still numerous questions around the length of the grants, their repayment terms, and the future interest rates or early redemption charges for the business owners and the funds need to be made available quickly to allow the flow of capital back into the economy.
In reflection, the mood was more positive than three, two or even one week ago as people come to terms with the new working structures, their continuity measures, and their access to Government support mechanisms allowing them to continue in business. There was a clear message of ‘don’t put profits before people’, look to more flexible business financing, and focus on the short and medium term horizon.
As I write this the first noises from Whitehall are appearing about a future lifting of the current restrictions and the potential of children returning to school at some point during the summer term. There are contradictory statements and nothing is set in stone, but maybe this is small glimmer of light at the end of a very long tunnel.
Thank you to the panellists who came from whisky distilling, food manufacture, corporate finance, agritech, and investment businesses.
Ben Walker is a Director at Livingston James, executive search specialists.