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Amid a sharp fall in the UK economy, stark changes in demand for some services, and a surge in remote working, companies in the creative industries are adapting their business models, not only to survive but to thrive.
The most important thing to acknowledge is that it is not business as usual. During the pandemic, some business leaders have been very responsive, whilst others have been caught like rabbits in the headlights.
Our advice is focus on the essential principles of business – even during these ‘unprecedented’ times. Develop robust continuity plans. Prepare forecasts for sales and protect cashflow to help get your business through the next 12 months in order to survive lost revenue streams. The number one business priority is to make it through.
Some businesses are rising to the challenge by adapting their business to difficult and uncertain circumstances. These are the businesses have the potential to emerge even stronger after Covid-19.
Take one of our investment companies − Northcoders, one of the UK’s leading coding schools.
Before Covid-19, Northcoders’ business model was based upon classroom teaching, training recent graduates in computer code and software programming at its campuses in Manchester and Leeds.
In March, the company took quick, decisive action.
“We took a huge pivot and moved all of our classes online,” Northcoders’ CEO Chris Hill told me recently. “For us, remote working was something we never considered before. It was unchartered territory.”
New business model
It was a big change for the business, but the new way of working has worked well. It has helped the company carry on training students and improve its online services.
“Covid-19 accelerated some changes that we had considered before and made us realise how agile we can be and deliver exceptionally online,” says Hill.
Online teaching has expanded the company’s reach outside of the North West and Yorkshire, Hill says.
“In the short term, our strategy has been to adapt how we deliver our courses, but this new way of remote delivery will remain a central part of our offering as we enter the post Covid-19 world; even when we start to reopen our campuses in Manchester and Leeds,” he says.
Online learning has proved popular with Northcoders’ student.
The remote learning works “seamlessly”, says Philippa, one of Northcoders’ students. Another student, Justin, likes being able to re-watch lectures in case there is something he doesn’t understand, while Katy says she doesn’t miss the daily three-hour commute she previously did to one of the company’s campuses to attend the course.
Despite all the changes to its business, the company has still worked on its long term-strategy, including expansion, when the economy hopefully picks up again.
For example, the company has been developing a new internal software and learning platform that will enable its students to complete new types of tasks, such as coding in a “sandbox” environment.
“It is very much in the early stages and we want to tailor it to our teaching, including certain programming languages and coding containers,” Hill told me.
Hill says that it has a strong pipeline for new business for after the lockdown.
Northcoders is a great example of how a company can respond effectively to the disruption caused by Covid-19.
It has taken quick action to expand their offer and adapt to the current circumstances while not losing sight of its long-term strategic objectives.
They made a continuity plan, secured a government-backed CBILS loan from Santander, on top of the investment already secured through the Creative Growth Finance fund from Creative England back in February, to help with financial support during Covid-19. The result? The company will be in a good position to invest in growth when lockdown is lifted. It is about being creative and being willing to adapt.
What are the main business worries of creative companies in the UK?
Among the companies we have invested in, loss of revenue is (unsurprisingly) a huge worry, along with paying their staff, managing costs and protecting cash. Here at Creative England, we are doing as much as possible to help, such as offering capital repayment holidays of between three and six months on companies’ debt repayments, although the debt repayment can be reviewed at the end of the period.
We know that for many companies within the creative sector, securing a government backed CBILS loan might not be an option for them, as any profits over the last few years have been re-invested back into growing businesses, expanding IP or creating content, or business models are often misunderstood by traditional lenders. Here at Creative England, we understand creative industry businesses. Our understanding, knowledge and experience of what it takes to make a creative business a commercial success is what sets us apart from other lenders.
It is about being understanding and flexible and protecting our mutual interest. We try our best to structure any loan deal to suit both parties, which means each deal is slightly different to the last and bespoke to each company.
In the past few months many of our clients have asked us for advice on understanding and navigating the financial support they can claim if they are struggling financially because of Covid-19. The sheer amount of financial help and qualifying criteria can get quite confusing.
We have summarised the financial support that companies can claim from the government and also grants and funds from companies including Facebook, Netflix, and Amazon.
For our early-stage company clients, the government’s “bounce back” loan scheme for up to £50,000 has been particularly useful. It gives them quick access to cash, which they can make go a long way.
It has been a strange, stressful, and unnerving three months. However, we are beginning to see more optimism among our clients.
Later in the year, I look forward to meeting some of them, for a coffee – or perhaps something stronger.