Opportunities for SMEs that are ready to adapt
The Covid-19 pandemic has had a huge impact on economies globally. It has led to large increases in unemployment and put businesses everywhere under enormous financial strain. In recent months however, hope of recovery has grown and countries seen to be exiting the pandemic have witnessed large increases in hiring rates, especially in sectors such as services.
In this regard, the pattern of economic recession and recovery is undoubtedly similar to the financial crisis of 2008. However, there are also key differences which are significant for SMEs.
Professor Alan Ahearne, Director of the Whitaker Institute at NUIG helped guide the Irish Government out of the financial crash of 2008, and in July 2020, was appointed as special economic adviser to the Taoiseach, Micheál Martin.
“A key difference between the two recessions is how governments have responded, or have been able to respond, to each crisis”, said Prof. Ahearne.
Covid-19 VS. 2008: The key differences
The financial crash of 2008 led to credit and budget deficits that could only be filled by raising taxes and cutting spending, which in turn, added to the economic downturn. This most critically affected the financial and construction sectors.
Professor Ahearne explains that the sectors most critically impacted by the Covid-19 pandemic are dominated by SMEs and micro businesses. Among these are the consumer-facing sectors of the economy; tourism and hospitality, leisure and personal services and some retail.
The key difference between Covid-19 and 2008 has been that throughout the pandemic, governments were able to borrow to support the economy without yet resorting to higher taxes and expenditure cuts. Signs of growth in these sectors is reason for optimism. And now is the time to focus on enabling SMEs to bounce back as quickly as possible and re-enter productive and growth phases in their businesses.
New Normal business opportunities:
The tourism sector has been heavily challenged by the pandemic, however continued uncertainty over travel restrictions will encourage domestic tourism. SMEs should be thinking about the opportunities to capture value from this market. Not only to support recovery but also for long-term growth.
It’s believed that in the future, climate change will cause a much bigger crisis than Covid-19. Prof. Ahearne explains that government’s need to enable a green recovery, in order to become a low carbon economy. This means opportunities exist for businesses to adapt, transition, re-brand and market themselves now as climate or eco-friendly and “ride the tailcoats coats of the green economy”.
InterTradeIreland has committed to enabling businesses to adapt to a low carbon economy, including our Synergy programme, which has supported projects such as the Irish Bioeconomy Foundation on an all-island biomap.
David Burns, Science, Technology and Innovation Manager at InterTradeIreland said, “The key to success in the transition to low carbon economies will be cross-border collaboration”.
“New breakthroughs in science and technology will be needed to address the unmet challenges in achieving low carbon and ultimately circular economies. Collaboration across the island of Ireland will be crucial to realising those goals”.
Global supply chains were very much interrupted during the pandemic and many think they may be leading towards de-globalisation. What this means essentially, is a shift towards more localised supply chains, with businesses producing locally and consumers buying more locally – ultimately providing business security.
This is supported by InterTradeIreland data from the All-Island Business Monitor, which has shown that in the last year 35% of firms have made changes to their import supply chains to limit disruption to their business and 1 in 10 of those have shifted to sourcing components locally.
Kerry Curran, acting Director of Strategy and Policy at InterTradeIreland, suggests this trend is likely to continue in 2021 and beyond “As businesses strive to be competitive in a rapidly shifting market, gains made from supply chain adjustments will likely remain a strong feature in the months and years ahead.”
As a consequence, Prof. Ahearne advises that businesses remain agile, adapt where possible and “grab these opportunities by the horns” in order to prosper in a post Covid era.
Covid-19 threatened the health and wellbeing of people across the world and because of this, we’re more conscious than ever. Opportunities are therefore arising for business to create products, services and experiences that offer real wellness benefits. Surges have been experienced already in parts of some sectors such as leisure, with more people taking part in activities than ever before.
Professor Ahearne adds that a key ingredient for surviving the downturn and prospering in recovery is “agility and adaptability”. Businesses should be looking for ways to tap into consumer’s ‘Covid savings’.
SMEs need to examine and act on changes in consumer trends and spending. One thing the pandemic has revealed is the surge in eCommerce and online sales. For companies who wish to develop their online sales and marketing, business supports and funding are available through the E-Merge programme.
Contact us today for more information on business supports from InterTradeIreland.