Small Biz Matters Radio Show 5 May 2020 – Business Survival Guide

Last week I was on Alexi Boyd’s Small Biz Matters radio show talking about how businesses can survive and thrive in these uncertain times.

You can listen to the full show here https://www.smallbizmatters.com.au/blog/survive-thrive-in-these-uncertain-times-highlighting-the-basic-mistooks-your-copy-1066

Alternatively read below for a transcript of my comments on the show

Alexi Boyd – Small Biz Matters

Welcome to Small Biz Matters, the show where you work on your business rather than in it.  Today we are going to talk about what you can do to survive in these tough times. It is a tough time. It’s a tough time for many businesses, particularly those in the retail sector and those who are just working through an incredible downturn.

There was a time within living memory where we experienced something like that. And it was the last time where your business might have been impacted in this way it has been in the last couple of months. It’s been fast and furious and the impact to the whole economy has been sudden.

It’s not only affected you, of course, but it’s also affected your stakeholders, your suppliers, you key stakeholders, your connections, basically everyone in your business or around your business as well. But the biggest question of all is, were you actually ready for this.  We didn’t have a crystal ball, but if you or your business had survived through the GFC or had a major downtown what did you take from that experience, and learning from it now creating a new form of preparedness, which might have helped?

Well, you probably didn’t have the right person with you to recognise this experience from either yourself, or from their experience that you could put into practice.

Wayne Wanders, is a virtual CFO who brings with him 35 years as a chartered accountant., and decades of experience, working with small, medium and large business at every stage of their life cycle.  He actually it gets in there, and rolls up his sleeves and works alongside the business to understand how their businesses get back in control.

Welcome to the program Wayne

Why can we compare what’s happening now with what occurred in the GFC

Wayne Wanders A Real CFO

I think the key message is that while the GFC was not technically a recession in Australia, it impacted a lot of businesses and it happened very quickly to them.  And there is a lot of things that businesses did right in that period and there is a lot of things that business did wrong in that period.

We can sit back and look at what businesses did wrong and not repeat that mistake and use that to learn from it and go through it.

Because it was so long ago, not a huge number of people who actually remember or experienced those circumstances so they did not get that experience

Alexi Boyd – Small Biz Matters

That’s exactly right. And I was going to say, obviously, we can talk generically about business education and we can talk in general, about businesses and what they experienced. Are the takeaways from that, from that situation, the GFC and the crash, are they still relevant today, given the amount of time that’s passed.  Are there some fundamentals that we can learn from as businesses?

Wayne Wanders A Real CFO

There definitely are.

One area is looking after your staff and looking at the GFC I will give you two different examples.

If you look at the big accounting firms during the GFC.  They had to reduce costs, so most of them made the decision to lay off a whole lot of staff.  That worked during the GFC as they cut costs, but at the end of the GFC, when demand returned for their services, they did not have the staff to deliver. 

So, their revenue growth for the period after the GFC was significantly hampered because they did not have the qualified and experienced people to deliver what their customers wanted.  They suffered from that.

I will give you another example of a tech recruiting firm I worked with.  Instead of sacking their staff, what they did was that everyone took a paycut but kept staff.  After the GFC, when recruiting for tech jobs started again, they had 2 great advantages over a lot of their competitors. 

One they had their whole team there, they had to whole team to go and find people.  And recruiting is about who you know and they had all the connections from their staff still there and they could go and deliver and fill recruitment jobs quickly and really efficiently. 

They were able to ride the upturn and their revenue growth was fairly significant after the GFC.  And that recruitment company, even though it built up a huge pile of debts during the GFC, it paid them all back, it is still operating, now in 4 countries around the world.  All because they were smarter about how they managed their staff during the GFC.

Alexi Boyd – Small Biz Matters

I guess that is one of the reasons why the JobKeeper system exists is to keep that retention of staff keep that connection between your employees and your employer is going.   So that at the end of all of this, you If you can hit the ground running fast rather than retraining and rehiring.

Wayne Wanders A Real CFO

I expect that is the reason.  There are two reasons. 

One is to hide some of the so called unemployment, but from an employer’s perspective, if you can keep your staff on board, when you go and reopen or when things turn around, you don’t need to go and retrain your staff. 

Think about how much time, energy and money is spent training your staff.  And there are some industries like the recruitment industry when people lose a job, they tend to leave that industry so the pool of talent reduces so you are all then fighting for a reduced pool of talent afterwards, and when you are fighting for talent you have to pay them more so your costs go up and you don’t necessarily get the right quality of people.

Alexi Boyd – Small Biz Matters

That’s an important factor, isn’t it? Because we have a workforce that they’ve been since the GFC till now is much more transient and happy to even change careers, changing jobs. And then we’re faced with as employers, the prospect of having to having that talent drain within our entire industry, not just business.

Wayne Wanders A Real CFO

And the other one that many people don’t realise is that if you are not looking after your staff during this time, when the conditions improve, and more jobs are back out in the marketplace, guess who leaves?

It is your good people who can go and get a job, so your best staff leave.  You are left with your second tier staff and you are still trying to deliver what you were delivering before, so you are putting pressure on your business because the best staff are the ones who can get jobs somewhere else quickest and easiest and if they are happy they are going to go and you are going to have another way of struggling.  You have to meet what your customers what and if your best staff leave you are going to struggle.

Alexi Boyd – Small Biz Matters

Yeah, that’s actually a really good point. So, what are some of those keys decisions that you should make around your staff now.  Let’s ignore JobKeeper. Let’s ignore the employment regulations for now, but just some generalised when you’re in a crisis, what are some key decisions that you can make with in a crisis about staffing?

Wayne Wanders A Real CFO

The first one is that you don’t want to adversely impact your current customers just to save a few staff bucks.

You really need to focus on your staffing. Who in your staffing are actually supporting or serving customers and who aren’t serving customers?

On your staff that are serving customers, it is not about cutting costs 20 % or cutting hours willy nilly, it is about what can you do to make those staff more efficient, more effective to better serve your customers.

For example, if you have systems or processes, is there something in there that they are doing that really doesn’t add value. So rather than saying we want a 20% cut, get rid of this out of the process and save time.  Are they doings things or are there road blocks that make it slow in the process?  Try and remove these to save time and money.  Are there things they can do that better serve your customers and add more value to your customers, so rather than cutting costs, maybe you can actually increase your revenue by delivering a better or different product.

On the non customer facing staff, you have a different set of questions.  Why do you need that staff, and if you do need that staff, is there a way you can get that work done cheaper, quicker?  Maybe it’s reducing their hours, converting to part time, maybe its outsourcing.

And what I would say is that if I was looking there at your staffing, I would expect a higher cut in your non customer facing staff costs than in your customer facing staff costs.

So, you’re actually targeting your staff reductions to be more applicable.  The last thing you want to do is hurt your customers because you need them to pay you so you can pay your bills.

Alexi Boyd – Small Biz Matters

We all know that wages are a major slice of those expenses. And I should say, as a precursor this this all sounds very brutal in the current climate that we’re in because a lot of small businesses care deeply and care a lot about their staff and, and what we’re doing is we’re ignoring all that for now.

And just taking a really hard look, using this opportunity, I guess in the downturn and when everyone’s experiencing a bit of quiet time is an opportunity to really look at those processes and procedures and see which staff members not necessarily the staff themselves, but actually the positions and how they add value to your business long term.

So, we are taking a bit of a brutal look here on Small Biz Matters.

if you’ve just joined us, you’re listening to Wayne Wanders, who is the real CFO, a huge amount of experience across a great number of sectors and sizes of businesses. And he’s sharing with us some top tips on what to do during a crisis, which I think about 99% of us in small business land are in at the moment across the world.

Wayne let’s talk about about decisions around expenses. Now, this may seem a little bit obvious, because we can, we can look at our P&L, and we can look at ways that we can strip out some of those expenses right now. And I imagine a lot of us are doing that. But what are some of those key rules around expenses and slicing those back?

Wayne Wanders A Real CFO

Once again, we get back to the key rule and we don’t want to adversely impact your customers. So, you’ve got to look at your expenses about what spending it for and you don’t want to really adversely impact your staff.

A couple of things I want to recommend here. 

Most businesses have a bunch of customers that chew up a lot of time and resources, a lot of cost that make no money for the business.  So, the first thing you should really do is understand who is contributing the most to your profit and who is contributing the least to your profit.

One way to save costs maybe for those customers who are chewing up a bunch of resources and not paying 100% for them, you either increase the prices to those customers or reduce the service to those customers.  But for your top profit contributors, I would not do the same.  I would retarget some resources to serve them so that they stay with you through the process.

That is the first rule, look after the people who are making money for you.  The whatever is left you need to go through and say, do I need it.  But you need to be fair and realistic here, saving 20 bucks on a Friday pizza for the staff is what I call a fake saving.

Alexi Boyd – Small Biz Matters

So, it’s almost like you’re trying to find a balance between what it is that produces productivity and sales versus what can you strip out that’s not necessary. And maybe everybody has to sacrifice a little bit but it’s not going to impact on the productivity or happiness.

Wayne Wanders A Real CFO

Correct.  When things have been relatively good, people build in a whole lot of inefficiencies and stuff that is not needed in their systems, processes or expense, now’s the time to go back through everything.  Basically. what I say to people is challenge all of your business assumptions, how you doing things, why are you doing things and anything is not adding value to your customers it’s time to strip out.

Because the reality is if you’re not doing it, one of your competitors are doing it at the moment.  And when the economy turns, they are going to be there with a stripped down process and they will better faster to serve their customers, which potentially may be your customers today.  You need to get your teams more efficient and more effective.

Alexi Boyd – Small Biz Matters

What about the conversation that you can have with your suppliers in relation to credit and the timing around cash flow? How can How can that be assisted?

Wayne Wanders A Real CFO

A better conversation with your suppliers is more driven from a conversation with your customers.  Talk to your customers because what they need today may be different to what they needed a month ago. So, there’s no point delivering to them what they needed a month ago, if they don’t need it today and they need something else.

That’s the first thing, learn from your customers what they want from you today. Once you understand that, you can talk to your staff and talk tom your partners about how you deliver that.  And then you may need to get your partners to deliver you something differently and then at the same time you talk about payment terms what they are doing, where they are at, and they deliver to you. 

There’s no point promising to a customer if your partners can’t help you deliver.

That’s the real conversation.  It is a mindset issue for business.  Yes things are tough, but if you go in there with the view the glass is half empty and think of all the doom and gloom, you’re not thinking positive about how to change things to make it better, so when you come out of this you can significantly grow.

Alexi Boyd – Small Biz Matters

So, it sounds to me like there’s a really careful balance between keeping your clients your customers happy, keeping your staff happy, but also trying to cut costs.

So, is this something that the typical small business owner can probably do by themselves or what are they looking for when they need someone to support them in this time? What questions should they be asking?

Wayne Wanders A Real CFO

Often, I see that like a small business owner is so close to the whole process, and so attached to everything, sometimes they making emotional decisions, not actually stepping back and taking the emotion out of it.

The other thing I see with small businesses is that typically in a small business, most of their staff are yes people.  Very rarely do I see a small business who has someone they can bounce ideas off and get an honest opinion.  There is a lot of what I call yes people in their staff who are too afraid or frightened to tell their boss their idea is stupid. 

And that’s where someone from outside the business, basically a sounding board to bounce things off and say no, that doesn’t make sense or yes it makes sense.

Alexi Boyd – Small Biz Matters

You want someone as well, who’s outside the business has had experience beyond just your sector and what it is that your business does, right, you need to have someone who’s, I guess, experienced this through other types of economic activity or other downturns and, and can take a real outsiders approach.

Wayne Wanders A Real CFO

Correct, in certain instances with someone from inside your industry they have done the way they do it for the last 20 or 30 years, the same way you have done it for the last 20 or 30 years, but you’re not necessarily getting someone outside the industry going,  Why the hell are you doing that way? What are you doing that for? Why are you doing this? You need someone who challenges them.

If it is someone inside the industry, you need to make sure that they’ve got experience outside the industry to challenge what’s actually happening to the business owner.

Alexi Boyd – Small Biz Matters

Yeah, that’s really important. I think a key word there that you’ve mentioned there is challenging the business owner and like you said, somebody internally within your staff might not be comfortable about doing that, really helping you to examine the processes and also their too close to the other staff members to be able to say, you know what that person in these times, let’s take the opportunity that we’ve got with a downturn and with a decline in productivity, let’s take the opportunity to get rid of the weaker staff members, nobody’s really going to stand up in reality as part of a team, not if you’ve had a good team going anyway, no one’s really gonna respond with that, with that attitude.

Wayne Wanders A Real CFO

The one thing that is different this time to the GFC is the JobKeeper. And when I’m talking to clients and if you are eligible for the JobKeeper, pick one or two staff in your team and you keep them on.  Their job for the next six months, is to work on your processes and on your systems and to fix things up and make them more effective.  So, when we come out of this, you’ve actually had a process improvement in your business, paid for by the government, not by you.

You would be crazy not to use that free money if you qualify for JobKeeper to actually improve your processes, improve your systems and come out the other side looking better.

Alexi Boyd – Small Biz Matters

I’m hearing a lot of stories about business owners who, you know, saying that their staff members because they’re in retail because there’s actually nothing for them to do that the staff members almost refusing to come into work now, forgetting about what the legalities of that is with Fair Work.

What sort of tasks can you give your staff members to help improve your processes and procedures for future? What can you give them to do that will keep them active and busy and engaged with your business?

Wayne Wanders A Real CFO

Well, it depends on the businesses, for example, if you’re a café look if it is time to improve your front of house systems.  Can you automate your front of house systems better? Can you do things differently there?

If you are a restaurant or café, is there things you can do about the way you order your products.  How much stock you carry?  Have a look at your menus.  Maybe it’s time to day you don’t need a 30 page menu and for the next six months when we relaunch, we’re just gonna focus on 10 items or something like that.  Rework your menu.  Reduce your costs in stock, etc. Look at those sorts of things.

if you’re in another business that supplies to restaurants or cafes, look at what you can do to rework your own processes such as buying your food, storing your food, shipping your food.  All those sorts of things in the process.  It’s looking at what you’re doing.

Changing menus if you’re a restaurant or cafe or if you’re a beauty salon, can you spend the time to rework the website to get it up? Let’s get some marketing strategies going. 

I’ve got a client right now that was in the middle of relaunching their business.  They are taking the time now to sit back and make sure their website is up to date properly.  They are taking the time to get all their marketing together now so it’s all ready.  So, when things relax, they are going to go bang, now I am now going out and market because I am ready.  Its all about getting ready.

Alexi Boyd – Small Biz Matters

And all about hitting the ground running. Absolutely.

Look Wayne I’d like to thank you so much we’ve come right to the end of our half hour here on Small Biz Matters. Thank you so much for explaining so much of your experience and your knowledge working on the outside of businesses.

Contact Wayne Wanders for your FREE Business Survival Session

At the end of this session, you will have multiple ideas on how your business can survive and thrive in these uncertain times.

Simply fill in the contact form below or email me at wayne@aRealCFO.com.au or call me on 0412 227 052 to organise one of these obligation free sessions.

Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au