We have all been living in what I like to call 'the pandemic world' for the last few months and in some ways, we have become used to our new experiences. Working from home, spending more time with our immediate family, and navigating the common challenges we all face in the business world. This morning I participated in a zoom meeting with the rest of the United Way of Winnipeg fundraising cabinet. On the call we heard from Connie Walker, CEO and President of the United Way of Winnipeg where she discussed how they have moved past the emergency phase and into action and support mode.
I think that generally this is where the overall economy is as well. Now, make no mistake, many businesses are still in emergency mode, but I am speaking to where the general economy here and I like to refer to this as 'The Great Transition' in business. Despite the incredible response that has been made by governments and central banks all around the world, the uncertainty about the economy remains along with the changes it will make to the lifestyle we have become accustomed to. So, what does 'The Great Transition' mean for businesses in the future?
In my opinion, there are 3 different types of businesses that exist today which are:
The sad truth of this pandemic is that many businesses who have suspended their business or who were forced to, simply won't be coming back. These are the casualty businesses. In particular, I think that the most vulnerable in this category were already operating with thin margins prior to the pandemic. Think of your local small businesses, restaurants, and cafés. Many of these companies just will not have the resources to last as long as they need to survive.
The second category of business will mostly be looking to hang on and maybe get back to where they were pre-covid-19. These 'Water Treaders' will be able to survive and reinvent their businesses through cost cutting and downsizing. Think about higher end small businesses with better margins potentially that will be able to survive on lower customers or with social distancing measures still in place.
The third type of business I see will ultimately lead out of 'The Great Transition'. These are the businesses who are not only looking to survive but are also taking advantage of opportunities being presented to thrive! These businesses are currently investing in innovation, marketing and improving their efficiency. They are highly adaptable and therefore have adjusted quickly to the 'new normal' and were capitalized well enough to take advantage of opportunities when they arise.
Throughout history we have seen many examples of these businesses which are now iconic after starting during economic downturns. Disney was founded in 1929, the beginning of the Great Depression. HP launched in 1939, the beginning of WWII. Microsoft was founded in 1971, just before the oil crisis of 1973 and there are many more. 
Great for Some and Not Great for Others
How about the working from home trend? We have recently gone through an incredible experiment where many of us were forced to get out of our comfort zones and work from home, myself included. Some of the conclusions I have drawn from this experiment is that working from home is great for some and not great for others. In many cases I have seen productivity increases and depending on their home life situation, working from home was beneficial. For others, productivity was understandably difficult as there are just too many distractions.
The Move Towards More Flexibility
Work environments have been changing constantly and mostly moving towards being more flexible. I think that great companies will continue to move in this direction as flexibility in the workplace will allow employees to work in places and at times that suits them best based on their peak productivity. This obviously will not work in every business but there are many office places who should be reviewing this given the recent data we have all been able to collect and experience. However, most companies are not quite prepared for the challenges that this could present including their technology and security.
Emphasis on Security of Data
We could see big investment in these areas in the coming years with a key emphasis on security of data. This also has ramifications for real estate and location as companies may realize they no longer need to be in higher cost areas and can use technology more effectively. Maybe they do not need as much square footage as their stakeholders work more remotely.
A Focus on Mass Communication and Cultural Building
I can also see the potential for changes in how we mass communicate and culture build in businesses. For years there have been many people who protest the need for having large company conferences or product shows simply from the environmental impact of having thousands of people fly in from all over the country not to mention the cost. Innovative companies will likely start to rethink their communication strategy and product messaging. Perhaps this is exactly what technology like VR needed to finally enter the mainstream!
Ultimately, it is foolish to try and predict things too far into the future. While we are living through the pandemic it is easy to imagine how different the world will be in the future based on our current experience but I continue to believe that likely the biggest surprise will be how much remains the same. There is no doubt that there will be changes in trends and in our lifestyle, of that I am sure of but trying to predict exactly what they will be remains difficult.
One trend I see continuing with almost absolute certainty is that 'Innovators' are going to lead the way forward and will likely grow in multiples in the years following the pandemic. These are the businesses I am interested in.
- Grant White, CIM, CFP
Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with Industrial Alliance Securities Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.
This information has been prepared by Grant White who is a Portfolio Manager for Industrial Alliance Securities Inc. (iA Securities) and does not necessarily reflect the opinion of iA Securities. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered.
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