Tips to Survive, and how to Create a Plan to Thrive.
Here you’ll find actionable advice to help you manage your way through a difficult time, and set a plan to thrive on the other side.
You can come out stronger.
- Tighten your expenses beyond what you think you need to
- Know your runway. How long do you have at the current burn rate?
- You need to be watching cash flow like a hawk.
- So what is cashflow?
- Keep your creditors informed
- Think of the ATO as a creditor too.
- In practice, what this might look like.
- Be ever prepared, to present to the bank.
- Know what support is available to you.
Preparing to Thrive
- Structure your team to succeed.
- Start with strategy.
- What’s a business strategy?
- What’s a brand strategy?
- What’s a product strategy?
- What’s a marketing strategy?
- What’s a channels strategy?
- Pulling this all together.
- Develop the tactics and list the actions.
- Prepare things to push the go button as soon as you can.
- And look after yourself.
Note: The advice in the article is not financial advice. You should consult your own accountant or financial advisor or accountant who understands your own business and/or personal situation.
I am not your guru. But I might be able to provide some ideas, to help your business.
My name is Tim Davies. I won’t go through my full work history but suffice it to say, I’ve been through a lot in business. I’m not going to patronize you by saying I understand the position you’re in. I don’t.
I don’t currently have staff relying on me to make decisions that will have a significant impact on them personally. I don’t have a family at home worrying about the business and more importantly, my own personal well-being while trying to navigate this all.
Like the vast majority, I also have never led a business through such a strange time, where there is no certainty about when the levers will be pulled to gets the wheels of the economy turning again.
I have however managed a business through mass layoffs. It’s beyond horrible. I’ve been in a leadership position to rebuild that same business and take it well past its former glory. I’ve imported and exported products. I’ve built websites, designed brochures, dealt with the tax office, made calls (and personal visits) to creditors to manage terms and conducted 100’s of employment interviews to just name a few things.
That was all before giving it a crack for myself too. Since, I have started and ran multiple successful businesses of my own.
Over the past five years I’ve consulted to tourism businesses and Regional Tourism Organisations on strategy and marketing.
I don’t expect everyone is in the same position and as such that every idea will be relevant to everyone reading this.
But I do know there is probably a gold nugget in here for everyone.
The number one priority.
Tighten your expenses beyond what you think you need to
Even if you have a high value on culture and a ‘my team is my number one priority’ approach, you are no good to anyone if the business doesn’t exist in six months. So do what you need to do, as quickly as you can possibly execute it, to ensure that is the case.
There’s a fantastic interview from Masters of Scale recorded recently featuring U.S based Union Square Hospitality Group CEO Danny Meyer (who had to lay off over 2000 staff) with some practical tips specific for the hospitality industry on what this looks like, how to think about and engage staff during this time, what they are doing to give themselves a chance to come back stronger and how they’re pivoting.
There’s a lot you can’t control in a situation like this. So control what you can control. Tighten your fixed expenses beyond what is comfortable.
Know your runway. How long do you have at the current burn rate?
If you can’t answer these three questions straight off the top of your head, you need to stop what you’re doing and go work it out immediately.
- What are your monthly operating expenses?
- What’s your expected monthly revenue during this period?
- How much cash do you have?
In very basic terms, divide your cash by your monthly profit/loss (let’s assume it’s a loss of some sort) and you have your runway. How much time you have before the business is in critical condition.
*By cash I’m talking available liquidity. Including things like Debtors, albeit perhaps with lower expectations of prompt payment and/or payment in full.
You need to be watching cash flow like a hawk.
You should have a cashflow forecast set up and, even if you are not the person punching numbers into it, you should have better than a rudimentary knowledge of the figures within it daily. Yes – daily.
You almost can’t obsess over it too much. If you do not have a cash flow forecast, go do it now.
Without it, you can’t possibly expect to manage your business and make good, timely decisions. It’ll highlight things like if debtors are slowing down in paying, and how that might affect you.
So what is cashflow?
It’s the flow of cash coming in and going out of your business. It’s forecasting and assembling these types of things into a spreadsheet to know your cash position at any given date now or in the future;
- Forecast revenue and expenses
- Forecasting when payments will coming into the business
- Planning expense payments
- Knowing your Profit and Loss (P&L) shortly after each period
- Feeding any revised P&L figures back into the cash flow forecast
Being a predictive tool, it will give you the information you need to make critical decisions about your business in advance, rather than relying on the current bank balance to be the key signal.
Keep your creditors informed
The only thing worse than not being paid is not being communicated with. Having your cash flow forecast up to date will help you keep creditors better informed, which in turn, usually gives you a bit more grace with them.
At the very least it should help you form a plan and stay informed about the likelihood of being able to stick to it.
Think of the ATO as a creditor too.
In my experience, they are no different from most creditors in that if you keep them informed, have a plan and most importantly, STICK TO IT, they’ll work with you.
It’s not in the interest of the Government to see a ton of small businesses go under.
I would say even if you think you’re in a good financial position with a pretty good runway, it may not be a bad idea to touch base with them a put a ‘future plan in place’ if you have any foreseeable debt with them (e.g. like a BAS payment).
No one knows how long this is going to take to get through. Erring on the conservative side of prudence is not a bad idea.
In practice, what this might look like.
Let’s say you have a liability account you move incoming GST and your PAYG and Super obligations to regularly. Say, close to when they occur on a cash basis. (At this point can I say – if you are not doing this already or something similar, please plan to do it within the next 3 months). If you do you already you know that every quarter you have the money sitting in that liability account to meet all of those obligations. Which, you do.
Would it hurt to contact the ATO to make a plan to pay your next BAS in installments over the course of the 3 months instead of all upfront? Perhaps even longer if they’d agree to it? Which, as every situation is assessed on an individual basis I have no idea if they would for you – but would it hurt?
It’s another 1%er that could increase your runway and help you get to the other side of this. If you’re in a position to keep up with moving liabilities across to that account and there’s no reason to dip into it unless things get really tight, wouldn’t it be better to have available than not?
Before you call them, check out their website where they share information on supporting small businesses through times like these.
Be ever prepared, to present to the bank.
Not only will these things (a cashflow forecast, knowing your financial position, communicating with creditors, running a liabilities account and having a plan with the ATO) help you survive, they’ll also demonstrate to a small business banker that you have the competency and a plan to manage through this situation. Which always instills confidence.
You don’t want to be in a situation where you get a call, or call up, to run through your numbers and not be able to demonstrate you have a plan in hand.
The worst-case scenario is you won’t have to use any of this planning. In that case, you’ll still be better off for having done it and being across your position and plan better.
Know what support is available to you.
Most Regional Tourism Organisations are acting as pretty good sources for tourism business-specific information now. Reach out to them. Here’s a great example from Tourism Greater Geelong Bellarine.
That’ll be a good starting point and of course, if you can’t find what you need, you also have the State and Federal Governments publishing their own updates frequently.
Preparing to thrive
Structure your team to succeed.
Your team needs to know what the expectation is and what your strategy to get through all of this is. Communication is key. You won’t be able to over-communicate with your team. Slack is a great web-based tool to help you achieve this as a remote team.
For those working remotely, it’s a perfect opportunity to judge them by their output which in my opinion is a far better measure of performance than someone’s time present at their desk or how clever their quips are in meetings.
So what does this look like? You need structure.
You need semi-regular reporting from them on two things.
1) What they plan to achieve over what time frame
2) What they did achieve in that time frame.
It depends on your business needs and your own leadership style how frequent that might be.
Daily or weekly for example.
This is a great time to get some structure in place for reporting, giving your staff more autonomy to get on with the job at hand and put a system in place that allows them to do that, without you meddling around in their business.
Make sure staff know the expectations of them and have what they need to achieve those expectations. But ensure you have accountability too.
A system of regular catch-ups addressing those two questions will do that. If you prefer to document it as meeting minutes, maybe do that.
Start with strategy.
Now is the time to work on the business, as for many of us, we can’t work in it. What might this look like and why is it essential to start with strategy?
You see it time and time again when you work with small businesses. When they don’t have a strategy, they are more likely to fluff around without a clear direction and purpose for what they’re trying to execute.
But it can be confusing what strategy is and how it differs from tactics. An ex-colleague used to explain Goals, Strategy, and Tactics like this.
If your Goal was to win the war.
Your Strategy may be to divide and conquer.
The Tactics may look like; bringing down bridges to prevent resupply, dropping propaganda to create dissent among the enemy… etc.
When I think about strategy, I break it into these parts;
- A business strategy
- A brand strategy
- A product strategy
- A marketing strategy
- Channel strategies
What’s a business strategy?
A business strategy sets the direction of the business at the highest level. Where are you trying to take the business, for what end result?
Take McDonald’s for example. From the very early days, the business strategy was to create a great restaurant model that presented as a good investment to potential franchise owners, so they would open franchises on land McDonald’s would lease back to them. They made wealth through property, not only from selling burgers and fries.
And of course, to achieve this they needed a great brand (strategy), great product (strategy), effective marketing (strategy) and effective channels (strategy).
What’s a brand strategy?
There’s a fair likelihood you initially set your businesses up because you were passionate about some part of the industry you’re involved in.
Maybe you wanted to share the exceptional local produce with people, you were inspired by the people behind the wine industry in the region, or you just love nature.
Your brand strategy should aim to connect your target audiences with your ‘why’ on an emotional level. It what people say about you when you’re not in the room. Here’s a great article on brand strategy (brandtolife.com).
People buy from brands they have some affinity with. There’s a reason people keep buying Nike over other shoe brands, and it’s not (necessarily) because the product lasts years longer than its competitors.
It’s because Nike stands for something people can buy into it and feel for themself.
Nike’s brand strategy? Empower people to be the hero of their own story. Their customer’s story is literally at the center of what they do.
What’s a product strategy?
Product strategy aligns what you’re trying to achieve (at a business and brand level) with what you’re going to sell.
Naturally, it wouldn’t make a lot of sense to develop winery tour products if your brand strategy was to be the expert connecting people with nature experiences in your region.
What’s a marketing strategy?
A marketing strategy is your plan to reach your target customers and to move them to purchase your product.
e.g. A restaurant’s marketing strategy might be: We’re focusing on influencers and food writers. We know our food will speak for itself and if the right people experience the restaurant, they’re going to want to tell everyone.
A provedore might be: Our product partners will be our best referrers. We’re going to produce great content about their product, that they can’t produce for themselves. We’ll make it easy to share this content, so they do. This is how we’ll reach new audiences.
Your marketing strategy will change over time. When I was working with my Dad’s business, Geelong Winery Tours, the strategy early on was quite a singular focus to build high-quality Google Reviews up. We knew this would help improve our position in Google search, make the business look well established and build trust with new audiences. Which in turn, would lead people to choose Geelong Winery Tours for their tour.
You see can see how a marketing strategy then dictates tactics and not the other way around.
The tactics for above end up being things like; providing a rave-worthy experience, make it easy for people to review the experience by providing links in email communications, sharing the reviews on the website, sharing the reviews in social to encourage people to write them in the first place, make sure we’re asking for reviews… and so on.
What’s a channels strategy?
Your channels strategy is how you’re going to use each marketing channel available to you.
When it comes to marketing channels, the most common mistake you see in small businesses is, they want to use everything that is available to them. As a result of trying to do everything well, they do very little well.
You’re far better to choose a handful of tools in your marketing mix than to try and do them all.
Facebook and Instagram might appear as good channel opportunities, but if you don’t have the resources to do both well, there’s little point trying to use both. Choose one and do it well. If you get traction, resources grow or change, then add the other channel if it makes sense.
Choose the channels you want to use and have a plan for what you’re trying to achieve through them. Then develop the tactics and actions that you need to execute.
Pulling this all together.
Start at the top and work your way down.
Know your business strategy, your goals, and what you want to achieve by existing at all.
Know your why (your brand) and have a plan on how you communicate it and connect with your target audience.
Develop products that help your target audience feel, discover or become your ‘why’.
Create a marketing strategy that helps you move your business from where you are right now, to the next stage.
Choose the channels you use carefully and know why you’re using each that you choose, and what you’re trying to achieve by using them.
Develop the tactics and list the actions.
Once you have your strategy, list out the initial actions to start implementing it. It’s that simple.
Let’s use the restaurant from the marketing strategy example again.
A restaurant’s marketing strategy might be: We’re focusing on influencers and food writers. We know our food will speak for itself and if the right people experience the restaurant, they’re going to want to tell everyone.
The list of actions may be;
- Procure the best local produce we can
- Create our signature dishes
- Train staff
- Run secret diners to test our processes
- Develop a list of publications we want to target
- Start following them on Facebook and Instagram
- Get great images of our restaurant and product
- Tag the influencers in our posts
Defining WHAT needs to be done, gets a whole lot clearer when you know 1) what you’re trying to achieve 2) why you’re trying to achieve it, by 3) when.
Prepare things to push the go button as soon as you can.
We don’t know how long we’re going to be stuck in this limbo. But there’s no reason to not be going flat stick still, putting these things in place to hit the ground running as soon as the gates are open again. So go do it.
And look after yourself.
Because you’re no good to other people if you’re not good within yourself.