Covid-19 arrived in Britain on 31st January 2020. On 23rd March 2020, the Government reacted to the widening outbreak with a stay at home order banning all non-essential travel and social contact; this included shutting businesses. The Police were given emergency powers and the world was to change forever, although at that time none of us knew exactly what lay in store.
I reacted immediately to the Pandemic by creating what I called “The Friend Programme”. My instinct told me that business owners would need all the help they could get in the weeks to come.
At the time, I was fearful that a number of my clients’ businesses would not survive, especially those involved in leisure and hospitality.
For our part, the first few months post lockdown saw an Indian Summer. We had 3 months of record turnover in a row and business had never been so good. Everyone seemed to want advice and their R&D Tax Credit claims doing. There was practically no travel and meeting a client was a rarity. Zoom meetings became the order of the day. I rather liked this; the weather was good so I sat outside a lot and I had a lot more time.
One of my sayings is that I have not had two lives. Everyone seems to expect me to know what to do but, as I have no previous life’s experience to draw on, all I can do is what I think is best at any point in time.
Aspen Waite went into the Pandemic having enjoyed hockey stick growth and there was no reason to believe that this would not continue. My strategy was ambitious, we were about to launch Aspen Waite Radio, we bought a sandwich business in Southampton and invested in Innovation and Capital Expenditure.
During 2020, we also invested in new practices in Wantage and Porthcawl, both out of cash. I rather nobly promised the staff that I would keep them all in work and not utilise the furlough scheme. As it happened, this is what we did.
In March 2020, I thought I was a really excellent Chief Executive; we had a compelling offer, a unique marketing strategy and I remember saying “we can be any size we want to be”. Then from September 2020 everything changed. Our sales for the second half of the year 2020/21 were 30% less than in the opening half.
I was not happy! I saw this as inefficiency and the team not working effectively or planning properly. It took me until September 2021 to fully understand how Covid-19 affected business and, in particular, our business.
Slowly but surely our cash reserves diminished. Our overheads reflected our growth strategy but we were now seeing a reduction in sales. With the benefit of hindsight, I was slow to react to the changed circumstances:-
- I did not understand our cost structure well enough.
- I had not come to terms with what was going on out there and how it affected my business.
- To some extent I was embarrassed by my lack of enquiry into Aspen Waite Food and Aspen Waite Radio costs.
We incurred a lot of cost that we could have avoided. On top of this, I was blamed by some of my colleagues for the reduction in our cash reserves. For the most part I am at peace with myself over this. Our cost structure was in line with what we expected to happen.
With the reduction in sales, my guideline marketing percentage spend of 7% had risen to 10%. We could not afford this. The secret was to achieve sensible cost control whilst retaining the courage to keep to the strategic vision. It took several months but finally I managed to achieve this. More on this later …
I have never lacked courage or the ability to work hard.
From October 2020, a new Paul was born. The Radio Station was excellent as a station playing music but it was not relevant to Aspen Waite’s business. Nobody in Professional Services had ever had a radio station so there was no guide, no book to read. I realised I had to be the one to write the book.
We have greatly reduced costs whilst utilising our own talent and having a lot of great business content. Fear of failure is a driving force and I have looked under every rock in the Aspen Waite world. I often used to say that Aspen Waite had become a Top 100 company, despite ourselves.
I now realise just how big “despite” was!
I have become a very operational hands on Chief Executive. The dream of being Aspen Waite’s wise man and in an Executive Chairman type role are well and truly dead.
Another legacy of the Pandemic has been severe Mental Health issues for staff and I include myself in that category. Staff frightened to come to work; others, even big strapping chaps, walking around permanently with face masks on worried they would catch Covid. Two very senior directors openly admitted mental health issues and this has severely affected who they are and how they work.
I spoke to one quite recently and I said “if you don’t think that I suffer from many of the same symptoms/fears, etc. as you, you would be mistaken”. The difference is I have a higher sense of duty. Running away is simply not an option.
A few months ago I realised that Aspen Waite’s success was based on the strength of its network and the interaction between people. For the most part, people have not been seeing each other and this includes our own people.
I had breakfast with a leading West Country bank manager in November who told me that he had not met a single customer for 20 months. It was, therefore, hardly surprising that he had made no introductions over that period. He has made 4 since.
My experience is that the first lockdown effectively turned the business development light off. It went back on again recently and I am fearful that there will be another lockdown in the New Year that will put us back into darkness.
Whatever one thinks of UK Government policy, the furlough scheme has protected many sectors and was undoubtedly generous. What the Government has failed to do is focus on the more deserving sectors such as hospitality and leisure; this includes unfair treatment. Nightclubs and bowling alleys have spent a fortune on making their sites safe but keep getting closed down. Inconsistency and injustice are concepts I really struggle with.
The High Street has been decimated with many big names having opened their doors for the last time. The focus has been so much on protecting the NHS that the thousands of business casualties go unnoticed or unreported. There is now a distinct possibility that hundreds of thousands of businesses will fail in the coming months. This could equate to as much as 25% of all businesses.
What can you do to give your business the best chance to not only succeed but prosper?
I am going into the New Year with a clear strategy and we have agreed quality budgets for all our businesses. Given the level of uncertainty together with the scars of battle gained in the last 21 months, I am also mindful of what might happen should the light be switched off again. Practically no new business, difficultly in communicating effectively with clients and extracting information from them.
So there has to be a Plan B. In our case this represents:-
- A thorough review and understanding of all costs.
- Appraisal of all staff to better understand who does what and Key Performance Indicators.
It is extremely important that if Sales are A and Total Costs equal B, giving a net profit of C, that if A reduces, B must also. I have a list of decisions that I could take that would reduce costs, ranging from relatively straightforward to giving up on a dream. This highlights the importance as a business owner of really understanding your business and forward planning.
This does also unfortunately lead to me waking up at 3am and thinking things over.
- Several years ago I foresaw the change that would take place in the Accountancy section. My prime objective is to create a diverse group that is not reliant on any one activity.
Our growth has been fuelled by our expertise in the R&D tax credit space. My forward prognosis is that this is a declining market with more difficult operating conditions.
Despite the difficult trading conditions over the Pandemic, our investment in Innovation and new activities are likely to pay dividends in 2022. Even if we see a contraction in our main cost centre sales, we have given ourselves the best chance to grow our business particularly in these areas:-
- New Environmental Consultancy business.
- Growing our Corporate Finance business which needs a much greater marketing focus.
- Commercialism of our Marketing and Radio offerings.
- We have developed a portable Anaerobic Digester that has global potential.
- Our food business has won several new orders with the potential for much more (subject to finance).
I have devoted my life to helping others whether it be running faster, cycling longer, passing exams or, most relevantly for this magazine, advising business owners to help them maximise their potential.
I have made many mistakes in my life and I went into the Pandemic as a relatively naïve CEO but I go into the New Year as a battle hardened executive. I hope that this article contains valuable lessons and guidance for you, the reader. Everyone needs a friend so if you would like a no obligation chat then I will gladly do so. I also promise to reply to any e-mail the same day and free of charge.
Here are my gifts to you:-
- Never give up or lose hope.
- Be courageous, stick to your guns and be resourceful.
- Work hard.
- Do the right thing.
- Find great people to work with.
- Be well advised.
- Plan, plan, plan.
- Fully commit to your business, including financially. If you do not believe in your business, how can you expect anyone else to?
- Have a plan and a Plan B.
- Better to be a prudent man and survive.
- Prepare realistic budgets and regularly update them (rolling budgets).
- Have a good marketing spend; short-term thrift can lead to failure to develop your business.
- Admit your mistakes and learn from them.
- Be brave and make those hard decisions and make them in time.
- Never stand still, always look to move forward, invest in innovation and product and brand development.
I believe that 2021 had to happen for Aspen Waite to have a chance to be greater.
Lao Tzu said “A journey of a thousand miles starts with a single step”.
Aspen Waite have proved to be true friends to businesses, we are always available 24/7 to help; contact me, Paul Waite, FCA FCCA, Chief Executive, Aspen Waite Group. Tel: 01278 445 151, Email: paul@aspen-waite.co.uk