By Professor Tim Vorley, Pro Vice Chancellor and Dean of Oxford Brookes Business School
Einstein once said “in the midst of every crisis lies great opportunity”.
Many small businesses might not find comfort in these words. The immediate challenge has been on survival and individual wellbeing, but focus now turns to the future. With a recession inevitable, a lot of firms will not simply ‘bounce back’. Instead, they must focus on positioning themselves to ‘bounce forward’.
Resilience and adaptability are key. Small business owners and managers have shown agility and innovation by rethinking and pivoting operations. Central to this is understanding customer need. We have seen restaurants and retailers move online and firms establish new collaborations and alliances, as well as new forms of education and entertainment engagement. Some businesses have adapted production lines in response to the crisis – for example, distilleries creating hand sanitiser.
These are all examples of business model innovation, which is how small firms will come through this crisis – and is critical to future growth and competitiveness. This is not just about survival and short-term fixes, but generating additional revenue streams and enhancing longer-term resilience.
Most businesses think about innovation in terms of their offering, but there are other dimensions. Another aspect is aligning resources with revenue streams and enhancing the customer experience, which can improve both performance and productivity.
Innovating a business model is never easy.
It starts with reflecting on the value your business creates, and identifying different ways to provide it. While traditional consumer demand has weakened, customers have not gone away; they just have different needs. This crisis has highlighted small firms’ social value; many have developed considerable good will.
Because they tend to be more agile than larger counterparts, small businesses are well-positioned to innovate. Provided they take a lean approach, they can rapidly test new ideas and scale what works. This will bring challenges, but these can be managed by understanding customer needs. Not all responses need to be permanent strategic shifts, and short-term experimentation can enable firms to refine approaches.
For example, a bespoke online sales option might not be necessary; it can be more expedient to sell via a platform such as Instagram, Amazon or eBay. The key is to explore what works.
In recent months the Government has announced measures to help businesses. The views of small firms on their appropriateness and accessibility has been mixed, but small business owners have the power to shape their own destiny.
Small businesses also need help in areas from marketing and cash flow to business continuity and digital transformation. Business schools have been providing advice during the crisis, particularly to those with Small Business Charter status.
The changes many small firms implement now will outlast the crisis, generating new sales and opening markets. Many SMEs are making the best of the situation; they will emerge stronger and more resilient.
Professor Tim Vorley is Pro Vice Chancellor and Dean of Oxford Brookes Business School and Vice Chair of the Small Business Charter. Views expressed are those of the author and not necessarily those of FSB.