central south
3 The Central South economy with its sector diversity proved resilient through the downturn following the 2008 financial crisis. In subsequent years we have seen an increasing number of its businesses expand into overseas markets. The increased focus on e-commerce and online sales due to travel restrictions now means it makes little difference whether you are servicing a client in your region or in another country. Our mid- market companies can continue to succeed and increasing numbers can provide services around the world if we invest in digital skills and our ability to adapt.
4 Supply chains are likely to face ongoing pressure and flux as disruption to global supply arrangements and the repurposing of manufacturing capacity around the world becomes more evident. Preparing contingency plans, outsourcing or re-shoring operations, relocating production and reducing cash tied up in supply chains will remain key to future success.
5 Digital is here to stay, but that creates new risks and challenges. The quick shift to remote working for many businesses has put a strain on IT teams and systems, with many failing to adjust controls due to the urgency of the changes. Cyber and fraud threats will represent a growing risk, so businesses need to urgently revisit their risk register and assess the impact that working in a more digital, remote way will have.
Along with risks, these trends represent significant opportunities for businesses that use this time to rethink how the future might bring efficiency, optimisation and growth.
Innovation is key
Many of our local businesses are also redesigning their products or services, leading to high levels of innovation and the need to bring to market new ideas quickly. Access to finance through the government-backed loans and incentives has meant many businesses have been able to redesign their offerings quickly.
Traditional incentives such as research and development tax credits still exist in addition to this support and shouldn’t be missed, and some of the support such as the VAT deferral will need repayment and so businesses will need to plan ahead and ensure the right funding is in place.
Other companies are also redesigning their supply chains, distribution channels and operations, outsourcing many processes, increasing efficiency and also accessing systems to expand into new markets.
The journey ahead
What is clear is that standing still is not an option. The reality is that alongside planning for an effective economic recovery from the Covid-19 pandemic, businesses also need to plan for a potentially protracted global recession, for the outcome of Brexit negotiations and shifts in competition and markets.
Business owners need support more than ever to think through the above disruption and complex change. We are using our Rethink framework to help clients manage business priorities and address issues in a focused way. This is helping their decision making and identifying the changes needed.
The road ahead is far from easy. The world has changed as a consequence of Covid-19. Businesses need to understand this ‘new reality’ as early as possible and rethink how they will be positioned within it. As part of ‘Rethinking the Central South’ over the coming months we will be tracking how our regional mid-market businesses are meeting this challenge and sharing the insights from their business leaders as they make that journey.
If you’d like to discuss the regional outlook further, or you’d like to find out how BDO can help your business ‘rethink’ its future strategy, simply contact me at:
malcolm.thixton@
bdo.co.uk
THE BUSINESS MAGAZINE – SEPTEMBER/OCTOBER 2020
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