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5 Ingredients Businesses need to Cook up a Storm Post Covid

Updated: Feb 14, 2021



I don’t mind admitting it; I’m one who has vigorously pursued career success at every turn at the detriment of knowing how to cook. There I said it.


But don’t laugh because it’s actually quite tragic. Up until recently my wife would joke that the only thing I could be trusted to cook was a barbecue.


So, this second Melbourne lockdown and my wife moving to a full-time job, has brought about the need to acquire skills I neither knew I had, nor particularly ever wanted.


Turning to anything, anyone to help I felt the Naked Chief, Jamie Oliver, must be able to assist. After all, if he cooks without any clothes on, it’s a good chance his recipes aren’t too complicated. I’m not sure such success would translate to the ‘naked CEO’ so I quickly put that thought out of my mind.


I came across one of Jamie’s books called 5 Ingredients and found that you could make delicious easy meals without too much cooking knowledge. It was written for people like me, providing me the confidence to have a go. In fact, the whole concept of needing only 5 key ingredients and one or two other staples, many of which may already be in your fridge or pantry, is an intriguing concept that could be extended beyond the kitchen.


It has always been my contention that solutions to help businesses grow and prosper shouldn’t be complex. I believe there are 5 key ingredients to business success.

Rod’s 5 Ingredients for Transformational Business Success!


While the short-term outlook for businesses in the private, mid-market and family business sector varies greatly by industry, it’s important to consider what rebuilding and reshaping will look like once the economy begins to return to a state of normalcy, or establishes a new normal.


Putting a strategy in place for this phase and beyond will help prepare you and your business to take advantage of opportunities in this rebuild phase.


I believe there are 5 main areas you should be applying your focus to now.


INGREDIENTS:

  1. Cashflow (Borrow a cup from the neighbours)

  2. Customers (Offer products / services aligned to Customer’s needs)

  3. Expenses (Reduce into a sauce)

  4. Suppliers (Ensure they are mixed in well)

  5. Staffing (Essential ingredient)


METHOD:


Step 1: Cashflow

Understanding your business’ cashflow is critical at any time, but particularly in a downturn. To be able to make appropriate decisions to address a downturn, preparation is key and includes:


1. Understanding your cash reserves and how long they will last under different scenarios

  • What do the next 3-6 months of operating cashflow look like for your business?

  • What are your known cash inflows (revenue)?

  • What are the known fixed and variable expenditure?

  • If there is a negative cashflow gap, how many months before your business uses all available cash and facilities?

  • What will be the cashflow impact on your business when any government stimulus ceases for you, or for your customers and suppliers?

  • How long would they last if there was no revenue? 25%, or 50% of historical revenue?

  • How long would they last if there were delays in collecting revenue?

2. There are several options for business to seek access to capital during the rebuild period. Federal support programs designed to help small and medium businesses impacted by COVID-19 is an obvious place to start.


The challenge with federal programs is that the funding is limited – so it’s important to consider other sources of small business funding, including:

  • traditional small business loans

  • small business term loans from banks, credit unions and online lenders

  • merchant cash advances

  • business lines of credit

  • contemporary financing options - accounts receivable financing; inventory financing; purchase order financing; equipment financing

3. As things are changing every day, institute a process to review your cashflow scenarios at least on a weekly basis.

4. What are your highest priorities for maximising cashflow? Write them down, so you can come back to them for review on an ongoing basis.


Step 2: Customers

During a downturn, Customer spending is down. Customers will be doing exactly the same thing as you, prioritising where they spend their money. Non-essential spending will be delayed or stopped.


However, key to growing your business will be understanding your customer’s priorities / needs – not what you assume they are but through research. Conduct your own market research. Survey your customers to learn more about them. If you’ve been able to keep your team on the payroll, put them to work on some of this research. Task them to reach out to everyone in your customer database to see what they may need and how your business may be able to help them.


Spend time listening to what customers are saying about you on social media and look at online reviews.

Also, explore how your competitors have focused on their customers. They may have some best practices that you can leverage.


  • Could you develop a new product or service aligned to the current market situation?

  • Could you change your operating model for how you engage with, or deliver to your Customers?

Whatever the strategy for growing demand, identify any related incremental costs and update your cashflow scenarios.


Step 3: Expenses

When businesses slow down, there is less cashflow to pay for supplies, repairs, marketing, or staffing.


So, businesses need to prioritise where they spend their cash. Using your Cashflow scenarios, what costs are required to be stopped or deferred until trading improves?

Now, it is important to note that not all costs are equal. The focus should be on securing your business’ near-term viability and positioning your business for the medium-term.

Putting it another way, cutting costs should NOT include removing all of your demand generation capability. Ultimately, businesses need to grow out of a downturn, by ensuring they have a sales and marketing strategy that increases demand for your products or services. The following are priorities for reducing costs:


Reduce, defer or eliminate non-essential operating / overhead expenses:

  • As a guide identify any expense that does not assist with demand generation (e.g.: travel, temporary staff, supplies, repairs)

  • With respect to Marketing and Sales do not remove all spend. Identify those expenses that are required to maintain a focus on future demand generation.

Whatever your actions are for reducing expenses, identify the related changes actioned for your costs and update your cashflow scenarios.


Step 4: Suppliers

For manufacturers, supply chains are being challenged – by borders and by their own viability.


Businesses should be looking at their Suppliers to ensure they can continue to meet your business requirements. If not, alternate options need to be looked at. Suppliers will be doing the same as your business – managing their cash and prioritising how to pay their Customers. Suggested actions are:


  1. Alternate Suppliers – investigate alternative suppliers to cater for risk of current suppliers not being able to meet your demand

  2. Supplier collaboration – quickly liaise with large and critical suppliers to seek relief – payment terms extensions

  3. Payment patrol – confirm that the business is paying suppliers on due date and not before –enforce internal rules and manage exceptions

Whatever the strategy for managing Supply, identify any related changes to costs and update your cashflow scenarios.


Step 5: Staffing

Once you understand the financial platform your business is working to, you need to look at Staffing, as the majority of most business’ costs are staffing.


When looking at staffing costs, businesses need to be careful to not permanently destroy the core capability and capacity of the business. Businesses need to keep in mind that this capability will be required again once the downturn is over.


However, cuts will need to be made in order to provide breathing space to keep your business alive and most importantly with the ability to GROW out of the downturn. These decisions will be tough. Most people will be supportive of a reduction in hours of work to support your business and preserve their position.


Have frequent and transparent conversations with your staff.

Involve them in your planning processes as you map out future plans for rebuilding and reshaping the business. Truly engaged employees often offer the greatest ideas and involving them in the rebuilding stage will give them a sense of ownership in their roles and responsibilities.


Options to consider:

  1. Look at any government assistance, to support retention of staff

  2. Immediate focus should be on retaining the permanent workforce. We’re all in this together, that includes your employees. Remember that they could probably use your support right now. Prepare your business for success after COVID-19 by showing your employees you care.

  • Offer training opportunities to empower your team and put your company in a good long-term position.

  • Check in frequently with your employees, see how they’re doing and ask if they need anything to improve their process.

  • Provide your employees with services like new certifications or important industry information.

  • Implement rest and relaxation (R&R) policies or make work hours more flexible to accommodate your employees’ needs.

  • Offer your employees “side projects” or opportunities that may have been off the table before.

Engage in virtual video “coffee breaks” with your employees and encourage them to do so with their teammates.


Look Beyond Your Office

Do what’s in your power to help your community. Many distilleries are temporarily making hand sanitizer, and Louis Vuitton has been making masks instead of handbags. Doing what you can to serve the common good will show generosity and improve your business’s chance to succeed after COVID-19.


Ask yourself:

  • What do we do?

  • What do we have?

  • What can we do to help?

Customers are aligning with brands that have been joining in the fight against our common enemy. Why not your brand? You could end up attracting new customers, increasing your popularity and boosting profits in the long run, just by pivoting your business toward your community’s needs.

So, I have to admit I’m struggling a bit in the kitchen. However, I refuse to give in. Jamie Oliver has been my go-to but sometimes I find myself using more of Gordon Ramsay’s vocabulary.


What I have learnt from Jamie I can take into business, that is that often the simple methods, employed using the barest of ingredients and some staples like communication and leadership, can be remarkably tasty and successful. For now, my wife is in total agreement.


I just have no clue what to do when I get to the last recipe of his book.


Hold the press, as an update, thank goodness for Fathers Day. I’ve been gifted Jamie’s new book 7 Ways, the premise is to take staple ingredients we already have in the cupboard and elevate them to new heights. Now that’s a metaphor for business recovery if ever I’ve heard one.


Stay tuned.


Rod is a business advisor providing smaller businesses with the necessary skills and processes to deliver their business improvement and turnaround initiatives in the role of advisor and delivery manager. In particular, based on 30 years advising and delivering large and small enterprises on technology projects, Rod has provided guidance and support to businesses on how to use technology to grow or to support the scaling of businesses. For more information refer to www.transcendhcs.com.au.

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