Some time ago I wrote about Covid and the Economy – here is an updated personal perspective looking to a new financial year. – John Cleghorn
The government is talking a great deal about Australia getting vaccinated and staying on track from an economic perspective, however, in many circles, businesses are struggling to keep their collective head above the water line.
Sure, we can all see the statistics put out by the press where “only” a small number of businesses have fallen but we see no statistics about the 1000’s that are making no money, hugely stressed and on the edge of failure.
We are doing our best. Working hard, travelling around, spending as much as we can to help the ones doing it tough.
The issue is, that I do not believe that we are past these tough times yet and we as SME owners are forced to look after ourselves the best we can. Doing what we do best, using our personal skills, getting help from professionals when we need it and not sitting waiting for help from others.
Recent events show us that Covid may well be around for a while, so plan for the worst and reap the benefits of your planning and business smarts as we move forwards. We continue to see overseas events that are unprecedented by way of disruption and continued economic closures.
History tells us that the best time to invest is during tough times. That may sound hard when you are struggling to pay the wages next week but keep it in mind if you have the opportunity to invest in plant, people, training, business acumen and the like. Remember, if you believe in yourself and your own success, you are more likely to see it come to fruition.
The chances of us falling further economically waits in the shadows and we should all be doing our very best to mitigate these circumstances should they return. Keep the sun shining on your business.
How our future looks and whether we succeed or fail is up to us, no-one else. Our future is about our attitude and commitment to getting to a “new” normal that sees business sustainability, profitability and team member retention. This MUST become our new “normal” team and family environment.
A huge amount of whether we succeed or collapse with our head in our hands during these times is attitude. Positive attitude creates positive results. Whether they be emotional, family, financial or business based. If you do this, your team will to. Positive accentuates the positive.
Remember, if we believe it, we will see it. We must remain positive, look for opportunity and have a will to win, for if we are negative and believe that failure is the only option, then we will fail.
So, here are some thoughts about the future and some positive and relatively easy things that you can do to help prevent your business failing.
Prepare for worse than you expect
Recovery is not a silver bullet, it takes time and energy, don’t count on it too soon and do not sit waiting for Government assistance. Remember the old saying, “Shoot for the stars, miss and you still reach the moon”.
Expect at least another twelve months of tough times. Ask yourself, am I running as fast as I can? If not, speed up fella, catch the success train.
We know that Tourism, Accommodation and Hospitality, are really struggling. We now have travel bubble with New Zealand. Is it the right thing or not? Time will tell us the answer. Regardless of New Zealand and a “bubble”, if you are in a good position, go and help our hospitality and tourism folk, spend some money in local currency.
To some degree, we are all in this and remember that many of our customers are also in a similar position. Lack of customers, lack of stock, lack of money and so it goes on – so plan well and look for opportunities outside your traditional work. The majority of SME owners tend to stay within their safe space, their personal “Product and Service Bubble” and we must look outside that “comfort space” to new products, new services and new ideas. What can you do differently? What about the World Wide Web – are you even there yet? Are you “running hard” in your business?
Remember if you think you need help, you probably do. Think about what stresses you have in your business. DO you know how to fix it? If there is a question mark? Call a professional Business Management Advisor to assist you. Contact one of the team in Australia.
Do it now! www.primestrategies.com.au
Remember: Cash flow is the secret to survival
Businesses go broke because they run out of money, not because they are unprofitable.
What that means is that you need cash flowing through your business to keep it going. Such as: Buying stock/Selling stock, Paying Creditors / Receiving monies from Debtors, paying your team, the telephone and power bill and so on…
Some thoughts:
- Slow down the process of paying bills if you can. Be fair, but strong minded
- Chase debt, get the money in as fast as you can, no excuses – it is your money and you are not your customer’s bank. Tell them so.
- Work to improve productivity. Talk to your team about the tough times, they will appreciate the frank conversation. Let them in and share your concerns and it will improve morale and productivity by default
- Measure everything every month. Back cost your quotes – did you make any money?
- Tidy the business like you were selling it. Just like when you sell a house or a car, clean it up and “sweep the step”. Trim all that excess stock, reduce those unnecessary expenses thereby creating a better future
Trim unnecessary expenditure
One of the easiest things to do is look to reduce expenses and your cash outflows. Do not slash all your expenses, as many of them are critical to your business. Select those that are unnecessary for the moment. All that cool stuff like the subscriptions, may have to go on hold for a while.
Do not be rash on the things that keep morale up, the coffee machine is probably something that keeps the team happy and chatting in a positive manner every day. A strong and positive business culture is incredibly important during tough times.
Your survival relies on your team to support you every day. Have them working with you, not against you. Expenses that maintain and lift team members morale are good, so keep them.
Onboard your Team
Talk to your team. Ensure that they understand the predicament and that you need to all work through this. During these times your team will be under stress as well so look after them. Remember too that productivity is paramount to your success. Measure everyone and everything. Keep on track with quality of service, quality of product and delivery. Make sure your team have pride in their part in the business After all your team are your biggest asset.
Be smart with your people
You do not want to lose your team. Job Keeper may well have helped you but now things are past that – be innovative regarding annual leave. Reduce your risk by having some take leave. This reduces you’re Annual Leave risk and you had to pay it to the team anyway. This may allow you to better utilise their time in the busy times later in the year.
Get your money at a faster rate
Look to how you can improve the speed of cash coming in. Chase all debts and do it now. Don’t give up, it is your money after all. If they owe you money STOP supply of stock and services. Use the: “I am happy to supply that for you as soon as I see the payment for your outstanding account in my bank”.
Look to seven days rather than 20th of the following month for any new clients.
Never give a discount without getting a significant benefit in return.
For example: Payment within 24 hours
What about your Suppliers?
Try picking up the phone and talking to your main suppliers. Often, they will come to the table with an improved price or better terms. If you are on thirty days then ask for sixty.
If you are in a cash rich space you could suggest that if you pay early, they will give you a discount. All these things are worth a try.
Look at all types of credit opportunities; Credit cards where you can pay within thirty days and get no interest. Just remember, pay before the due date.
Property Lease
Have you spoken to your landlord about some rent relief? Push for a reduction for the next three to six months at least. Look at the possibly of a deal. Will the Landlord reduce your rent for a few months if you increase the term of the lease? Remember though, your landlord also has a business to run, so be fair, work together for the betterment of both your businesses. Regardless of what the landlord says, they do not want to lose you either.
Keep existing business and Network
Over communicate with your customers, but do it well. Don’t send them rubbish for the sake of just sending something. Make sure that the information is relevant to their business and stay close to them.
What are the Hooks that keep your Customers? They are all different, aren’t they? Some stay because you are convenient, some stay because they like you, some stay because you have the “right” product range. Stay focused and make sure you look after their “Hook”. Network with everyone you have ever known, get your name out there to everyone. Talk to old customers, existing customers, new customers, everyone everywhere, and do it now.
What about your stock levels?
How much cash is tied up on your stock shelves? Do you really need to have all that sitting on shelves costing you money? Do you know your stock turns by product? How can you minimise the amount of stock you carry? Are you able to get deliveries more often? Can you do “bundles” and sell more at a slightly lesser margin but improve cashflow whilst reducing stock levels? Is it time to dump all that stock that has sat for too long on your shelves?
Marketing
Remember too that low price and value are not the same. Simply having a special of 40% off is not sustainable long-term. Think further out in your planning There are big ego’s out there who will always want to “be the cheapest”, let them go. Be smart about how you go to market. Think before you “speak” on marketing your products. What is the true “value” of your product versus the competitors ones? Use this as your lead. Work to take share from your competitors, catch them napping. Strive to be the best you can be and look at ways to entice customers to you and your business.
Where are your opportunities for growth?
The majority of your competitors, if not all, are in the same position as you in the market. Be positive and think about the opportunities out there. This is the right time to innovate, look at new product ranges, invest in your future whilst others lie down and do nothing. Remember, those that invest at this time, recover much faster.
Summary
Staying above the line in these days is tough. No bones about it. However, positive attitude, and some structural change such as the above will help you.
Survival and a real future for you and your business is possible. Make sure that you “adjust” your way of thinking, create positive realistic goals for you and your team. Meet with them regularly and communicate often. Have a forgiving attitude and care for yourself and your “Work family”.
Talk to us if you need a shoulder and a professional to assist you in to your future.