I have said in the past that this is a two-part crisis we’re living through. We’re still in the health part of the crisis. Even though we’re only just moving past the peak of the virus, there is pressure to start winding back lockdown measures.
This is a gamble. 70% of the UK thinks its too early to lift lockdown at all right now. Indeed, Nicola Sturgeon today confirmed that in Scotland lockdown would continue for at least another three weeks. A signal of what is to be announced this weekend? Or will the home nations start going down their own paths on this? Time will tell.
The second part of this crisis is economic. There was another raft of PMI data released today which was nothing short of dire. You can only compare the numbers being churned out of the global economy to the Great Depression. Could we be headed to a second? Its perfectly possible.
The domestic and global economic picture I will look at in another post. But what is becoming apparent, especially in the last few days, is that our little part of the economy is entering a phase of unprecedented volatility and change.
Our sector may not look the same again after this. Its going to rip apart certain business models.
No more knocking
I’m going to look at this from an installations point of view. Think about the larger, volume-based companies pre-crisis. Many would door canvas to generate leads. Many would continue the long home visits trying to secure a sale in a single sit on the night. Even if it takes hours.
Well, both those options are now firmly off the table. The prospect of sitting in people’s homes for hours is now dead. As is door knocking. They simply won’t be allowed to do it. The problem is, for many large regional and national installations companies, this is the business model they have relied on since the dawn of time. In the space of a couple of months that business model has been wiped away.
The nationals are particularly exposed right now. Large companies are hard to adapt so quickly to new trading environments. Smaller firms are generally more agile and can quickly change their plans as they have far fewer people to get on the same page. Its a different story when you look at the likes of Everest and Anglian.
How can you change a company structure, ethos and training at companies so large, quickly enough to fit the new digital sales era our industry is quickly moving towards? The answer is its damned hard.
And perhaps the egg timer is running out for some. This is what happened to the Better Capital 2012 Cell, the investment fund behind Everest, earlier on in trading today:
The share price later recovered to 2.00, but the fund has seen a steady decline to an almost worthless value for a number of years. Everest are not in great shape this is an extract of a recent trading update provided to the London Stock Exchange:
The Company issued an announcement on 26 March 2020, which disclosed that the corona virus pandemic had inevitably had a serious effect upon the portfolio companies to which the Cells are exposed. There have been no material developments since that date. Within Fund II, in which the 2012 Cell is invested, Spicers OfficeTeam and Everest remain in very considerable difficulties with severe financial challenges and much effort is being dedicated to maintaining their future operations.
In normal times, there would have been some wiggle room to find more money or time to keep things afloat. But when you consider the aforementioned business model is no longer an option, you have to question what options are left.
Its not just the nationals that will be getting twitchy. There are regional chains and other large companies who will also rely on the hard-sell type business model and door canvassing that will be doing some serious head scratching about where to go from here. Their old ways are no longer possible.
The new digital age
I read a report a few days ago which said that a decades worth of digital evolution has taken place in the space of a couple of months. With people and businesses forced to operate from home up and down the country, we have all found new ways to carry out our work. Much of it online and through technology. Perhaps we would have liked to have done it at our own pace, but we have now entered a brand new digital age at the most rapid pace.
Installers are going to find selling to homeowners very different. Not simply because of the health and safety measures they are going to have to put in place simply to meet a homeowner, but in the ways homeowners will want to deal with companies in the next couple of years.
Many have adapted their websites to encourage people to deal with them virtually. Some are already carrying out virtual appointments on Zoom or Facebook. Existing tools like Solidor’s online door builder continue to make it easy for installers to quote doors for homeowners. Social media has become the primary marketing tool as printers have closed their doors. Lots are working from home and not needing to go into the office. I am in that bracket too myself.
Its become a very different working environment, and although these changes that are likely to be with us for 12-18 months isn’t forever, it is long enough to change habits permanently for some. Consider as well the psyche of the general public. For so long we have been warned about the dangers of going outside. It’s going to be a hell of a task to convince parts of the public that going to visit places is OK now. So, we have to be prepared as an industry to reach out to them in different ways. Especially on the sales front.
Smaller installers are going to be able to adapt to this new trading landscape easier than larger businesses. Their models can change quicker according to their environment. Not so easy with the bigger companies.
The fact is that this crisis is ripping up business models left, right and centre. It is quickly changing how we all work, how we interact with the consumer and its creating a new business model for us. Some will thrive. Some will survive. Some will not. The volatility on the horizon in the coming weeks is going to be immense. As we reopen the country and the support schemes begin to be wound down, we’re actually entering the most dangerous phase for business over the next few months.
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Absolutely right. The digital revolution is now inescapable and smaller businesses can adapt to it very quickly. To do so they have first to survive the lockdown, then understand the future, strategize and plan and finally execute the changes. Small businesses will almost inevitably lack the skills needed to be on the front of this wave. They will need to take advice and to reach out for help to others outside the industry. I own part of a small fitting company (Dovecote Windows and Doors) and also run a group of independent advisers specialising in such support. I am particularly… Read more »