Prepare to grow your business post COVID-19

One of the main reasons clients engage me is for my advice on how best to manage growth.  However, a seedling won’t survive and grow if it is choked by weeds or planted on stony ground. To give it the best chance we first prepare the soil.

As business owners, we are all used to dealing with the risks and frustrations that get in the way of our plans. These must be overcome if you want to grow your business. Faced with the current environment, I can totally understand how many people feel overwhelmed by the new challenges impacting on their cash flow. It’s not easy to hold your nerve and work through them. So  I want to share with you the three main barriers that I see my clients struggling with as a result of COVID-19. I’ll then make some recommendations on how to overcome them.  I hope it will help you prepare to move your business back to growth-mode if this is your goal.

 

 “Many of life’s failures are people who did not realize how close they were to success when they gave up.” – Thomas Edison

 

1. Supply chain disruption

There are delays in delivery timing, quantities and product mix in China, Europe, the USA, and many parts of Asia. These suppliers are dealing with the same three barriers that my clients are. The key is to leverage quality supplier relationships and ensure that your customers are kept informed of realistic delivery timeframes unless you can supply ex stock to cushion the blow.

 

2. Customer process disruption

A client of mine has a major New Zealand corporate as a customer. This single client accounts for 60% of its business. When New Zealand entered Level 4, it suspended all current projects (running into many thousands of dollars). It then completed a review for all projects to:

• preserve cash (this was not communicated to my client, but this strategy was 100% clear) and
• ensure that safe work practices were implemented.

Following the review, it re-instated 100% of the suspended projects. It then created an additional 30% of new projects. These additional projects went to the suppliers who responded pro-actively to their delays and best managed any frustration caused by their approach.

My client had in place significant bank funding that we had pro-actively established. It was, therefore, able to withstand the cash flow hit imposed by its major customer. Consequently, it was rewarded with additional revenue, at excellent margins.

 

3. Social distancing in the workplace

I am seeing across my client-base a reduction in efficiency and productivity resulting in social distancing. This sits between 15% and 30% depending upon the agility, flexibility and the ability of their people. By this I mean the manner in which they respond, react and find ways to work within these constraints to minimise their efficiency and productivity decrease.

 

What is different and why?

• It is the cumulative effect of these three barriers that is unique, certainly, in the 42 years, I have been in business.
• These effects are multi-dimensional and demand the very best response from leadership. Leaders will need to have not only excellent management skills but a resilience, mental strength, positivity and empathy never before required.
• All three add up to a cashflow hole (which will vary in size from business to business) of between 3-12 months + for many businesses in NZ.
• It is as if this COVID-19 virus has tested the very fabric of society, human nature and certainly business agility, resilience, focus and drive.

 

What can be done about this?

I will use the very best approach that I am seeing as an example so that you can compare and benchmark yourself against it. This will prepare you to move forward.

What are the main impacts, and risks and how can these be addressed and mitigated?

1. Even the most solid of businesses are experiencing disruption and cashflow strain, and/or pain.
2. It is both critical to address these three barriers individually and then also as a whole.
3. Keep closer than ever before to your customers, prospects and suppliers.
4. Work with your business partners – internal and external.
5. Use information flows as a risk management tool and also a generator of cash flow.
6. Use existing working capital wisely, generate it, manage it, and source it.
7. Leverage your bank relationship, resurrect it if necessary or create it if needed.

Where to from here?

We live in a world with social, environmental, emotional, financial and commercial needs. Your customers, prospects and suppliers have these needs, in various ways. Your people have never needed leadership support, guidance and positivity more.

My recommendations:

• Ensure that your revenue-generating activities are given the priority they deserve. That is part of your top three focus areas.
• Listen to your customers and suppliers – they will remember this, and the result will be more positive outcomes for you both.
• Ensure that you are getting daily updates on both cash flow and the tasks needed to keep the cash coming in. Make sure you are being paid by the right parties at the right time.
• If you are not familiar with cash flow and financial reporting and forecasting, then get the help needed to address this. This will be one of the very best business investments you can make, now and in the future.
• Support your people – this is the time to build on the team culture you have created and keep lines of communication open.
• Keep the following ways in which your business makes money, front of mind:
  • meet client and prospect needs;
  • look after your team, while asking them to deliver sometimes more than they ever have before.

 

Prep for survival, get ready for growth

We are just at the start of the COVID-19 triggered downturn, both globally and in New Zealand. Until a vaccine is available we are and will be living a modified version of pre-COVID 19 normal.

Since 26th March 2020 in my role as a business advisor, I have seen the very best and worst of human nature, leadership and business decision making. I have been more challenged personally and in a business sense than ever before. I am seeing exactly the same impact on my clients, colleagues, and prospects. We are all being forced to bring out the best in ourselves, our teams, and support our family and businesses. The next 1-2 years are not going to be an easy time to grow your business. Only the fittest will survive and grow. Make sure you and your team are sufficiently fit to survive and prosper – or if you have concerns, reach out.

 

By Murray Fulton

Murray presented the last webinar in our