The Pandemic Changed Everything in 2020
Amazon and Netflix aside, were there many businesses that didn’t need to do a complete rethink about how to proceed in the midst of a global pandemic?
I’m sure everyone is exhausted from the topic. We’ve had enough of lockdown, enough of social distancing, enough of masking up, even though it’s all been for the greater good.
But the good news is that we are on the homestretch. We’re ready to take on 2021 with a renewed vigour and some reassurance that the vaccines will go a long way to restoring some degree of normalcy.
But what does this mean for business and work culture?
Where does this fit in with the trends for professional services in 2021?
We’re going to take a look at some graphical data to find out.
Some graphs will be illustrated below as a result of a monthly tracker of 44 CEOs and C-Suite members at mid-sized professional services firms conducted on 29 January 2021 as part of ‘Re-tuning your firm’.
All data is courtesy of the Managing Partners’ Forum ‘Re-tuning your Firm’ online show, ©2021 Practice Management International LLP
Do you expect to expand or contract the level of activity at your firm over the next year?
It did feel like the writing was on the wall by mid-April. Oh sure, we’d all heard about the incoming virus and all that it could potentially do. But did anyone really think that it was going to impact us all the way over here on our little islands in the UK?
So you can forgive businesses for thinking that initially, it wasn’t going to cause much in the way of drama.
As you see on the graph, the confidence was grinding to a halt by the end of April, it was a steady downwards slope for anyone thinking they would grow versus an urgent need to rein it in.
After that, all bets were off and it really was a rollercoaster as lockdown followed lockdown.
The absolute nadir was in September after the summer folly that saw most of the UK conclude that they thought the pandemic had passed. If summery pints outdoors were allowed, all must be well.
Truly a case of “They think it’s all over…”; instead that was miles off reality.
It’s fascinating to see that a year later, most professional services feel bullish about the future, and the trend is very much back to a feeling that we are where we were before the pandemic had reared its little SARS coronavirus head.
What level of dip in your firm’s income are you projecting over the next 12 months?
On a more interesting note, this graph illustrates something about income projection that many may not have considered a year ago.
At the start of the pandemic, it looked like well over 50% of businesses polled firmly believed that their income would substantially dip over the next year. Virtually none thought they would emerge unscathed.
The 12% of businesses who thought, “Oh, we’ll dip a little, about 10%” was the category that grew to become the most populous as time wore on. By the time of polling, most thought there would be no decrease at all.
The reality of less overheads was a likely factor for the decrease in a gloomy outlook.
That and the realisation that Zoom made an ample substitute for IRL (in real life) meetings and client dialogue, both new and existing.
Looking at the face of it now, it appears that the majority feel that the next year shouldn’t incur any further losses, and it’s a tiny minority who are looking at a worrying loss.
To see 20% of professional services think that they would have 0-10% income loss at the start of the pandemic to a whopping 92% now in that very same camp is a positive outlook indeed.
Do you expect to expand or contract the headcount of your firm over the next year?
I suspect another learn is that with a lower overhead, most firms are beginning to realise that you really can expand and have a larger headcount.
Pre-pandemic, the prevailing trend for professional services was yes, we foresee headcount expansion. And then rightly so that decreased. As the pandemic progressed most places would not or could not expand with furloughs in place.
However, if you can employ more people to help deliver your services in lieu of extortionate mortar and bricks costs that you may have thought you needed previously, then the better you are placed to generate more revenue with extra able bodies on board.
The pendulum has swung back to where we were pre-pandemic and looks set to stay on course. So expansion of professional services firms seems to be the overwhelming modus operandi for the majority.
A few key questions that can be summarised in a nutshell…
I’ll just get these questions out of the way because the answer to them all is that there has been no substantial change in view of professional services from before the pandemic to now.
And what differentiates these is that they actually varied very little while we were in the thick of it.
- The three areas that carry the most weight during partner/director discussions are (in order of importance)? Finance and cashflow, marketing and new business generation, and operational performance.
- Three top priorities for your firm over the next 12 months? Develop a clear purpose and strategy, increase operations efficiency, and develop people skills and capabilities.
- The proportion of people working from home? The amount of office space required? Anyone who anticipated more, the same or less are at the same proportions as before.
What are the THREE constraints holding your firm back from achieving optimal performance in the current economic climate?
Pre-pandemic, the top three constraints affecting professional services firms were:
- Fee pressures
- Political uncertainty (Brexit? How quaint those times seem now)
- Lack of skills or talent
And looking at today, the top three now are:
- Poor economic outlook
- Financial health of client base
- Fee pressure
So fee pressure isn’t going anywhere.
What I find most incredible is that the financial health of potential clients didn’t even register on the firms’ radars last year. Not even a blip on the screen.
But now, this is almost surely a huge consideration for firms to recognise and factor in with forward planning.
Almost everyone has been financially impacted by job cuts and losses, reduced working hours, and furlough.
As families have learned to live with less materially, it also reflects that incomes have taken a hit and we don’t yet know how long it will take for that to recover.
Furlough seems to be extending over and over again, delaying the inevitable wave of job losses that are likely in the pipeline for certain sectors.
Perhaps this is a potent reminder that the financial health of your target audience should never be underestimated. And this segues nicely into fee pressures which may take a hit as a result.
In short, this fascinating poll is but a finger to the wind of what is to come. Aren’t we all learning to adapt and prioritise different things in our lives? Of course we are.
It should come as no surprise to anyone in professional services that is also very much the case in business too.
Author: Allison Cruise is the Digital Marketing Manager of Tricres