When the lockdown lifts: now what for business?

As hard as it is to believe, it’s been just over a month since COVID-19 was declared a pandemic.  

From the first reports of a new virus reported in the Chinese city of Wuhan in early January, to its declaration as a global emergency late that month, and a pandemic on March 11, the world has seen global confirmed cases soar pass 2.1 million with more than 144,000 deaths. 

The rapid spread of the virus has seen countries take unprecedented action to try to halt or slow infections, with borders slammed shut and an estimated 2.6 billion people — a third of the planet — in countries with lockdowns. 

With citizens confined to their homes and workplaces shut, the economic impact of the pandemic has quickly made itself felt – and it’s colossal.  

The International Monetary Fund now predicts the global economy will shrink by 3 per cent in 2020 with the world likely to see the worst recession since the Great Depression. 

Despite bullish commentary from some governments in early March, hopes for an early end to lockdowns have faded.  

In the US, the nation hardest hit in terms of active infections and total deaths, President Donald Trump, who hoped to be reopen for Easter Sunday, accepted reluctantly that wouldn’t occur but has been agitating for the restarting of the economy as soon as possible.  

On April 17, the US published a roadmap for state and local officials outlining when and how people could go back to work.  

On the same day, the UK extended its lockdown by a further three weeks, acknowledging dire economic forecasts but claiming that to relax restrictions would be risk a significant uptick in the spread of the virus and doing more long-term damage to the economy. 

Yet there are also signs of good news: among European Union nations including Austria and Italy, some easing of lockdown restrictions has begun, although limited in circumstances and approach. 

And in China, where the outbreak began, factories and business began to slowly reopen in March as part of a gradual return to pre-lockdown levels – but the world’s second-biggest economy has already taken a substantial hit, shrinking for the first time in decades in the first quarter of 2020. 

As health authorities continue to grapple with the medical challenges of COVID-19, the question for business is how to rebuild in a future where restricted movement and limited travel are the norm, and where ordinary activities remain curtailed.  

So what does life after lockdown look like for businesses emerging from these unexpected and unprecedented conditions?  

The answer may depend at least partially on the type of business as much as where it’s located. 

“Looking at economies around the world, we know that some industries and sectors have seen increases in revenue and productivity during this crisis – for example the retail industry, groceries and non-discretionary products are increasing, along with pharmaceuticals,” said Baker Tilly International Director of Strategy Ryan Piper. 

“Online platforms, panic-buying and safety concerns have driven traffic and revenues up while supply chains hold, which is a crucial part of the puzzle. 

“On the other hand, we know many other industries have taken a hammering – aviation, tourism, entertainment, real estate, food and beverage are some of those worst hit, and likely to be facing a long road to recovery.” 

Business around the world impacted by the coronavirus pandemic will be grappling with a common set of challenges, Piper says.  

Managing cashflow and unlocking balance sheets, assessing and revising capital expenditure, and business continuity planning – shifting staff to remote working, keeping supply chains moving and finding an operational new normal – will be top of the list. 

Also front of mind for many businesses will be assessing and applying for available government aid and stimulus packages, with extensive financial packages including the likes of wage subsidies, subsidised or low-interest loans and rent relief on offer around the world. 

But as with any crisis, Mr Piper says the 2020 pandemic will bring opportunities for businesses that are agile and open to finding new revenue streams, or new ways of operating. 

“The situation we’re in will to some degree force agility into a company’s way of thinking, business models and client approach,” he said. 

“Businesses will be finding their typical client and market levers are no longer available to them. The challenge becomes figuring out how and where to pivot, where the emerging trends are and what the new client drivers are, and being prepared to act accordingly.” 

Examples can be found in alcohol distilleries turned to making hand sanitiser to meet demand, global manufacturers switching operations to produce ventilators and medical equipment, and tech start-ups helping struggling restaurants and bars switch to online ordering and takeaways. 

Other sectors will continue to reel.  

Baker Tilly Staples Rodway business adviser Tony Maginness recently warned of tough times ahead for businesses in New Zealand, which went early and hard into lockdowns, rapidly reducing case numbers as it did so.  

The country’s economy is heavily backed by tourism, which represents about 6 per cent of the country’s GDP and employs 7.5 per cent of workers.  

‘‘Often there is a lag between businesses getting in trouble and seeking help with restructuring and liquidations,’’ he told the Otago Daily Times. 

‘‘While we have heard a lot of businesses struggling in the tourism, events, hospitality and fresh produce export industries, they have not yet appointed administrators and liquidators. We have increased our capacity to help businesses as this service becomes vital in the coming weeks.’’ 

Baker Tilly in Malaysia is also working with business leadership to pivot.

Malaysia’s Global Business Solutions Director, Loke Chee Kien believes Chief Financial Officers, together with their C-Suite, should adopt transformative mindsets subsequent to the pandemic.

“Businesses will need to review their business plans and reallocate their resources to optimise future returns after surviving COVID-19.”

Prior to the pandemic, the CFO’s goal was generally focused around financial growth. Now, CFOs are tasked with answering the million-dollar question: how long will the business be able to survive?

“For a business to emerge from this crisis, the CFO plays a crucial role in ensuring the continuity and sustainability of the business,” Loke said.

“In the immediate term, CFOs will have to review the business’ cash flow position as well as devise a survival action plan for the business for at least six months.” 

The other challenge facing businesses seeking to emerge from lockdown are the practical realities of reopening offices and workplaces. 

Baker Tilly’s China firm is managing this with detailed guidelines for staff heading back to the office, with preparations including the purchase of surgical masks, sanitiser, infrared thermometers, disposable gloves and disinfecting wipes. 

Regular temperature checks for employees, safe distancing and multiple disinfections of public office spaces each day add to the precautions – and handshakes are off the cards. 

It’s a lengthy list of precautions, but it’s worth remembering that should case numbers take off again, then lockdowns would need to resume.  

That would prolong the pain for businesses and economies around the world, and the IMF has warned that a second outbreak in 2021 forcing more shutdowns could push the world into recession for a second straight year. 

The coming months will be crucial, both in stopping the spread of the virus and ensuring businesses are able to navigate and survive the post-COVID world. 

“There’s no question the impact of this pandemic is huge, and will continue to be felt for some time to come,” said Mr Piper. 

“But for some it will also offer opportunity for innovation, and unlocking value in their people or operations. The steps taken now will play a pivotal role in determining how businesses emerge from the shadow of COVID-19 in a post-lockdown environment.” 

Eventually, the world will get back to work — but doing so safely will become a key challenge for business, governments and health authorities.  

Now, Cambridge University’s Biosecurity Research Initiative at St Catharine’s College, Cambridge, working with research partners, has pulled together a list of 275 options that could be used as part of a post-lockdown strategy, all designed to reduce the risk of sudden spikes in the spread of COVID-19.  

The list tackles five key themes for the post-lockdown world: maintaining physical isolation where possible, reducing transmission through contaminated items, enhancing cleaning and hygiene, reducing spread through pets, and restricting disease spread between areas. 

Some of the suggested measures are relatively simple, like paying staff to stay at home when infected, showing possible symptoms, or if another household member shows symptoms to reduce risk of hiding illness at work, and closing common canteens or eating areas where workers might congregate.  

But others could have enormous implications for business if adopted.  

Recommendations include: 

• Enforcing working from home for all jobs where this is possible 
• Enforcing non-working for all non-essential jobs where home working is not possible 
• Developing national registries of essential jobs and  
• Fining companies encouraging or forcing non-essential workers to go into work.  

Travel for business would be vastly reduced, with the researchers pointing to China’s plans to restrict plane capacity to 75% and other restrictions on maintaining empty seats and rows.  

But public transport would also be curbed under the recommendations, workers would be told not to go out to buy lunch and working hours would be staggered to reduce the risk that they all work at the same time.  

Teams would work in ‘bubbles’ — a term used in New Zealand as part of its lockdown strategy — and mixing between bubbles would be discouraged.  

Other options include:  

• Routine temperature taking and preventing access of those with elevated temperatures to public buildings and workplaces.  
• Holding events outdoors whenever possible. 
• Turning off background music in public places so people don’t have to raise voices or move closer and so perhaps increase transmission. 
• Advancing the use of contactless and voice-operated systems to avoid people touching doors, handles and screens or providing tongs and tools that are specific to one user to touch items.  

The list also gives some insight into the industries that might thrive thanks to COVID-19.  

It calls for the increased use of drones and driverless vehicles for delivery, the use of scan-and-go technology in shops and supermarkets so customers scan and bag their goods while going, and a massive increase in the use of industrial cleaning.