Supporting business services through coronavirus
The coronavirus pandemic has presented an array of challenges for the companies that support other businesses with facilities management, recruitment and technical services. Four Barclays experts share how the sector is adapting in unprecedented times, with the bank's support.
Across the UK, the business services sector employs 3.3 million people and adds an estimated value of more than £1.2bn to the economy. The sector encompasses a range of industries including facilities management, recruitment, business process outsourcing and technical services.
“The challenges that businesses are facing in the business services sector are very dependent on the sub sector they sit within,” says Andrea Delay, UK Head of Business and Professional Services at Barclays Corporate Banking.
The recruitment sector has had to contend with the impact of lockdown travel restrictions, which led many businesses to close or downsize their workforce, and others to put new hires on hold. Delay says: “The market sentiment will vary, and their ability to bounce back to a position of growth will depend on the sectors they support and the speed with which businesses recruit. There is an expectation that part-time vacancies and short-term contracts are to be expected, rather than full-time positions.”
While some sub sectors like the waste services industry have “experienced massive disruption”, others have been less affected. For example, Delay says, “business process outsourcing has seen a slowdown in tenders for larger projects but is generally experiencing encouraging behaviour from buyers to support their critical suppliers and ensure business continuity.”
We need to make sure that the clients we support are best placed to return to normality, grow and potentially expand relative to the new opportunities that may arise from the pandemic
UK Head of Business and Professional Services at Barclays Corporate Banking
Discussing the effect on facilities management companies, Terry Myatt, Relationship Director, Business and Professional Services Team at Barclays Corporate Banking, said: “The impact of coronavirus has largely depended on the return to work prospects of the sectors in which their clients operate. Those working with the aviation, leisure and commercial property sectors have seen a reduced demand for services – and even where there have been contractual commitments, many have been unable to continue services due to lockdown and social distancing requirements. Those with clients in food retail, warehousing and distribution centres and healthcare have seen increased demand for services, especially cleaning and security.
“Discretionary spend and project work, for example in the mechanical and engineering space, has reduced and whole divisions and teams have been furloughed. Often this is where the profit margins are made in contracts over and above the standard maintenance activity. Having said this, many mechanical and engineering firms were detailed as essential workers in order to keep buildings running for basic maintenance and compliance work.
“Different service lines have seen a varied impact and this is reflected in a recent IFM.net survey in which 43% of facilities management managers labelled the current environment difficult with limited opportunity, but 40% labelled it as positive with plenty of opportunity.”
For property management businesses, says Myatt, residential clients have “generally continued to maintain the same number of units and blocks. Whilst it is expected there will be some push back on quarterly invoices raised, as for example the same level of cleaning has not occurred or a property manager has not been on site, it is expected to be minor and small discounts may be offered.”
“The biggest challenge is to be nimble”
Empty offices and other commercial properties during the pandemic have been an evident challenge for businesses in the sector. Myatt says: “Commercial property managers will often gain revenue on a percentage of rent collected and we have seen rent discounts and holidays put in place between landlords and tenants, meaning this revenue stream is reduced. Those with surveying services have been heavily impacted during the lockdown and furloughed large numbers of staff as people are not allowed on site and demand for project work is greatly reduced. However, it is expected this area will recover as building owners consider getting tenants back in a socially distanced way.”
David Foreman, Area Business Manager for Barclays UK in North East England, says: “Whether people will want to go back to offices when it’s safe to do so will have an impact on business services.”
But, says Katherine Morgan, Head of London SME at Barclays Business Banking, many of these services could be more relevant than ever as the UK lockdown eases and businesses review how they might use their buildings in the future. “What we are starting to see already is some advisory consultants in the sector having conversations around alternative usage – how might offices look in the future, what kind of protection needs to be implemented?
The biggest challenge is to be nimble, to continue to be alert to changes in the sector, think proactively and understand how you can repurpose your offering or pivot it
Head of London SME at Barclays Business Banking
“The biggest challenge is to be nimble, to continue to be alert to changes in the sector, think proactively and understand how you can repurpose your offering or pivot it.”
Delay adds that several Barclays clients have already adjusted their strategy to offer new products and services: “We are proud to say we have seen our clients encouraging social purpose projects, including leveraging their contacts to switch their production temporarily.”
Helping clients return to normality, grow and expand
As the first UK bank to launch a dedicated team for business services, Barclays is uniquely positioned to provide expert support and industry insights to clients during this period. From government-backed schemes to innovative partnerships, the bank is offering a wide range of services to help businesses stay resilient.
“We’re participating in government schemes including the Coronavirus Business Interruption Loan and the Bounce Back Loan,” Foreman explains. “The levels of demand for these schemes have been unprecedented.”
Barclays is also offering clients a wealth of online resources including webinars on topics ranging from fraud awareness to business resilience and access to online support from Eagle Labs – the bank’s innovation hub for startups and entrepreneurs.
In addition, says Morgan, the bank has launched two new partnerships to further support businesses. “One is Barclays’ Back to Business toolkit for SMEs, created with Cambridge Judge Business School. It offers 15 hours of free training for businesses to help them build a recovery plan and make the most of the opportunities in front of them. So many things are changing and now is the time to think really hard about what the next best step is for your business.
“Barclays Business Banking is also partnering with Nextdoor, the neighbourhood hub, to enable businesses to connect and leverage their local community. We are seeing that more businesses are starting to think ‘how can I deploy my services locally in the community in which I’m based?’.”
The bank is continuously evolving to meet the changing needs of clients during this period of uncertainty, and while the long-term impact of the pandemic on the business services sector remains unknown, Barclays is “at the forefront of these discussions” and ready to “quickly interpret trends and respond rapidly”, says Delay.
“We need to make sure that the clients we support are best placed to return to normality, grow and potentially expand relative to the new opportunities that may arise from the pandemic. Financially, we seek to provide support and guidance where required, and to help to make the process as straightforward and transparent as possible.”
Backing UK business services through coronavirus
KMS: housekeeping service in London
A leading housekeeping services provider for hospitality businesses in London, KMS was left with almost no income when its hotel clients were forced to close during the coronavirus pandemic.
“KMS had to confront a turnover down to zero almost overnight,” said Co-Owner Clive Gates. “Given our cash reserves were being used to pay our employees, we immediately contacted Barclays to access the CBILS loan. Within two weeks of making the first call to Barclays, the money was in our bank account, having been approved by the credit committee.
“The loan has not only helped to bolster our cashflow at this difficult time, but crucially, it has allowed us to keep our 650 valued team members employed under the furlough scheme throughout this difficult period.”
Barclays Relationship Director Jon Batsman, who helped facilitate the loan to KMS, said: “The CBIL loan has been critical in allowing KMS to meet all their remaining expenses until the business can resume trading again. I’m delighted that we have been able to draw this CBILS loan so swiftly, following credit approval, in order to support the business during this difficult period.”
It Works Media: digital marketing in Leeds
Leeds-based digital marketing agency It Works Media, which provides content services to companies including BrewDog and giffgaff, saw a significant decline in work from its clients in the travel sector during lockdown – and applied for a Bounce Back Loan to help refocus their business strategy to e-commerce.
“Things were going great and we had high hopes for 2020. However, when coronavirus hit, a significant proportion of our existing client base was going to be impacted,” said Steve Pritchard, Director of It Works Media. “We’re fortunate as we have really strong relationships with our clients who will be staying with us in the long-term, but work has reduced, and our short-term cash flow was significantly impacted.”
Within 48 hours of applying to the Bounce Back Loan Scheme with Barclays, It Works received funding. Pritchard said: “The BBLS funding will help us to pivot to target new e-commerce clients and the money will be invested into employing someone that will be able to help us do that and get new clients on board.”