The changing face of business stability

• Amid unprecedented change, a business can only be stable through accepting and adapting change - not through resisting it
• SMEs have some inbuilt advantages in this environment. Surveys show many have adapted faster than large firms to the pandemic
• Resilience can be enhanced through better planning
  

When thinking about business stability, few SMEs can rival Whitechapel Bell Foundry. The firm started in 1570 and made the Liberty Bell (in 1752), Big Ben (in 1858) and the giant bell that rang to open the 2012 London Olympics.

This Shakespearean SME stayed in business through challenges ranging from the Great Fire of London, to the Blitz of World War II - the ultimate example of business stability. But in 2017, the firm closed its doors. Its ancient foundry in the East End of London will soon be a boutique hotel, an illustration of the changing face of business stability.

Stability has long been one of the most desirable assets in business, showing an ability to remain viable despite adverse circumstances. In the case of the Whitechapel Bell Foundry, for centuries it made the same product - large bells, primarily for churches - using similar production techniques.

However, business stability is changing. Businesses are no longer expected to remain stable in the face of change, instead they need to be resilient – to adjust, recover and prosper in a changing world. Firms that do not, may collapse like a Jenga tower of blocks.

“Resilience is especially important today because the business environment is becoming more dynamic and unpredictable,” said BCG management consultants Martin Reeves and Kevin Whitaker, writing in the Harvard Business Review.

Some business schools now have units with ‘resilience’ in their title, and Google UK searches for ‘business resilience’ are five times the level of ‘business stability’.

The resilience challenge is coping with unforeseen business dangers, ranging from climate change to technological change and disruptions to industries or society.

And resilience is also needed for growth. In 2021 research on sustainable business growth, adaptability came second only to organisational excellence as a critical factor.

SMEs and resilience

Large firms now have huge teams devoted to resilience. For example, one UK High Street bank has more than 200 staff with ‘resilience’ in their title, LinkedIn data shows.

And SMEs have some inbuilt advantages. A team of four US academics found that SMEs responded better than large firms to the pandemic saying, "Smallness… enhances a firm's ability to recognise that customer needs and opportunities to meet them have changed."

Bank of England data also shows that in 2020, UK large firms seeking financial stability typically raised money from shareholders (which doesn't have to be repaid), while SMEs had to use Bounce Bank Loans and the Coronavirus Business Interruption Loan Scheme (which does).

Nevertheless, a study of  UK retailers a few months after the pandemic hit underlines the resilience of small firms, with independent retail and leisure firms (defined as those with five or fewer premises) more resilient than larger ones, changing product lines and quickly setting up local delivery options.

According to a survey by Sky Connect, 66% of UK small businesses thought they were more resilient than large ones in the first year of the pandemic.

Training for resilience

Small firms can enhance their resilience with better planning. A World Economic Forum paper suggests SME leaders take steps to build:

• Management resilience - which includes making sure you personally are resilient, well-rested and healthy
• Revenue resilience - with diverse revenue streams and strong customer relationships. Whitechapel Bell Foundry’s designs are now manufactured by a metals casting firm founded in 1800 with a diverse range of products for many industries - not just bells
• Organisational resilience - with loyal employees who give honest feedback
• Operational resilience - with robust, well-mapped supply chains and strong data security
• Financial resilience - with strong cash flow forecasting and backup credit facilities

The changing face of business stability

The pandemic held many lessons for businesses, and the importance of resilience as an element of business stability is likely to become part of the 'new normal'.

In the Harvard Business Review, Martin Reeves and Kevin Whitaker said: "In today's business world, transient high performance is commonplace; it is sustained performance by resilient companies that stands apart".