My business setup doesn’t allow for furloughing

Leon Edwards, MD of point-of-sale display maker DisplayMode, had to think quickly to avoid his business going under after realising furloughing wasn’t an option.

Like many business leaders, Leon’s world came crashing down mid-March when he realised that the future for his company looked worse than bleak – it was potentially non-existent.

Corby-based DisplayMode saw orders for its point-of-sale displays – primarily for fashion retailers – dry up overnight. Figuring that the company’s only option would be furloughing its 23 staff, Edwards was then faced with a second devastating blow: he couldn’t. The way his business was set up wouldn’t allow for furloughing.

“If we kept employing people [through the furloughing scheme] and getting no revenue, it would have cost us about £100,000 a month to keep going,” Leon explained. “If we got rid of everybody, it would have cost us a whole bunch of redundancies and there still would have been a cost to the business of £30-40,000 a month because of rent and other stuff we’d already committed to. Whichever way you looked at it, we were talking hundreds of thousands of pounds over the next six months.”

Even for a business that turns over £3m a year, these projections meant that cash reserves would quite quickly disappear.

Scenario planning showed the way

“We do a lot of scenario planning,” revealed Leon, “and we plan for lots of different eventualities. When the retailers closed down and we started to understand the impact, we sat down and worked out the various scenarios if we could maintain 50 per cent revenue, 25 per cent revenue and no revenue.”

With almost zero revenue a distinct possibility unless drastic action was taken, DisplayMode decided to adopt the Dunkirk spirit and become one of the “little ships” that would help the UK in its darkest hour. Already adept at making things out of plastic, Leon’s team rapidly reconfigured the firm’s whole operation to design, prototype and then manufacture protective face-shields that are so desperately needed across the UK.

“In just over a week, we went from looking as though we might not be able to continue as a business to having a clear purpose,” Leon added. “This is categorically not-for-profit and is all about making a difference – we’re not going to make a profit this year. I think it’s payback time for a lot of businesses, and we just want to keep people employed and keep the economy going in our own little way.”

A promising start

On a roll of the dice, as Leon put it, the company gambled £40,000 on raw materials, tooling and machinery and got to work. The team set a target for selling 10,000 face-shields a week, which they exceeded by almost 300 per cent in week one. They look set to maintain similar figures for the coming few weeks at least.

“I’ve never been a fan of the five-year plan, but at the moment we’re almost on emergency planning, taking things week-by-week,” he explained. “We’re now looking at what the next plan should be – can we sell 200,000 units overall, for example?”

If so, he said, this might keep the firm afloat for a few more months. Thinking beyond this, he and his colleagues have started talking about what else they might do. “What’s next? What else can we make that might then enable us to go on a little bit longer?”

There are a number of interesting options, and if DisplayMode does get through the crisis then Leon is certain that the whole experience will have changed the very fabric of the business.

“Part of my strategy already had been about acquisitions so that we wouldn’t need to rely too much on retail,” he commented, “and I think what this has highlighted is that you need to make a decision before someone makes the decision for you.”

In the future, Leon will be so much more focused on other sectors he might be able to service, and what new products his team can bring to the table.

Leon’s top three coronavirus tips

Don’t take things for granted

No one ever saw this coming and probably didn’t imagine that there would ever be a scenario where their customers or raw materials disappear overnight. It’s a reminder that you always need to plan for the worst imaginable case.

Now is not the time to be profiteering

I think if you’re an ethical business, now is the time to keep being ethical. I think it’s the right thing to do – and people will notice.

Prepare for the world to be different when we do get to the other side

There’s a huge amount of uncertainty, and we need to be thinking about what is a year or two years down the line.