Five essentials for SME’s to survive the Corona chaos.

Mar 25, 2020 | Governance, Management

Five essentials for SME’s to survive the Corona chaos.

It is too easy for those not at the front lines of a crisis to brush aside the practical difficulties of day to day survival, in favour of the fluffier, albeit no less important longer term questions and issues.

Currently there is a flurry of activity from political leaders, roused from their partisan politics by this virus, resulting in a raft of measures that is challenging for owners of SME’s to understand, and access. However, it is essential that your spend the time, in a rational way, to understand the measures that will impact your business, what the qualification guidelines are, and how the assistance is to be accessed.

Many businesses are fighting for survival in the face of that Black Corona Swan that flew in and crapped all over them.

The five things business owners should be doing today.

Cash flow forecast.

Cash is the oxygen of business, survival without it is impossible. Having a clear view of the cash coming in, and going out over the immediate future is vital to making informed decisions. I always favour a weekly rolling 13 week forecast in most circumstances, and certainly in this one. There are plenty of tools out there, but a simple spreadsheet, filled with the input of your debtors and creditors ledgers, along with the bank reconciliation and a sales forecast will give the answers you need.

Do it now!

Cash ‘runway’.

You need to know how long your cash reserves will last in the event that you are suddenly trading at a loss, which is broadly illegal. This calculation goes hand in hand with the cash flow forecast, but requires you to break costs up into fixed and variable components. Those who regularly review their Break Even will have this information to hand. The provisions in the Corporations Act that refer to the personal liability of Directors who allow trading at a loss to continue, will be altered to accommodate the Corona virus, according to the PM’s March 22 statement. As yet I have seen no detail about this change, so be wary.

Communicate, communicate, communicate. Talk to major customers and those prospects that were about to be converted, to understand how their businesses are being impacted, and what you might be able to do to assist them. Talk to your staff, include them in the decisions around how best to preserve the business so that there is a job there when things recover. Taking holiday leave, unpaid leave, long service, job sharing, all may play a role. When you as the boss are getting really tired of having the same conversation, over and over, you might just be getting to the point where you are being heard.

Government assistance.

Both state and federal governments are setting out, with it seems common dual objectives, for the measures put in place, which are still evolving.

Provide assistance to those whose employment dissolves. This includes a specific Corona income supplement, the ability to draw down on superannuation accounts, reduction of social security deeming rates, and direct payments to households.
Provide assistance to businesses to keep employees working. This is the crucial one, as it is businesses that will provide the impetus for recovery. From April 28, the government is providing up to a maximum of $100,000 to be used to cover overheads, and keep staff. There is also included in the second package, a payment equal to the withholding tax on wages and salaries, of up to $50,000. The government has also put in place a specific Corona virus assistance scheme to assist access to working capital, by guaranteeing 50% of new loans by banks to eligible SME’s. To fund this measure, the Reserve bank has announced a lending facility to the financial institutions that will reduce the costs to those institutions of lending to SME’s. The states and territories have all weighed in with measures that relate to businesses operating in their states. Ignoring the stupidity of the federated system that results in an inconsistent patchwork of regulations, resulting in complication and confusion, you should investigate the specifics, and understand how you will be effected. In NSW for example, the government has announced they will waive payroll tax, and will being forward planned reductions in that awful tax on employment.

Be of service.

These are tough times, that induce a sense of desperation, which too often ends up being seen by others as the ‘hard sell’. This is the wrong time to be seen that way. Instead, set out to be of service, to use your resources to help mitigate the impact on others. They will respond positively, and remember. This does not mean you do not sell, obviously, but it does mean you do so only with the best interests of the buyer at heart, not your own. And, for heavens sake, stop those silly brand managers sending out those patronising ‘Covid-19 measures for your safety’ emails to anyone and everyone whose email address they collected in some way over the last decade. We do not want to hear from you, but will remember you clogged up our inboxes at a vital time when things get better.

It is a lot, on top of the day to day battle for survival, but spending your time wisely, on the things that will make a difference, is the best investment you could make at this time.

Header photo credit: David Brim, davidbrim.com

A Corona, heavily disguised as a Black Swan

Mar 23, 2020 | Change, Governance

A Corona, heavily disguised as a Black Swan

There is a quote by Earnest Hemingway, when asked how he went bankrupt. His response was: ‘Gradually, then suddenly’.

The same thing is happening to us now, as the Corona bug cuts a swathe through economies worldwide.

For the last 25 years we have become interconnected and interdependent, as individuals, businesses and economies. This added to the stability of the system as a whole, and while all goes well, in the absence of some black swan event, we continue to slowly dig deeper into interconnectivity.

Along comes the black swan, and all that interconnectedness and interdependence pivots in an instant, from being a source of stability and certainty, to the catalyst that suddenly brings the whole system crashing down.

Imagine a group of climbers on a rock face. They are all roped together so that if one falls, the others are strong enough to hold him, and allow him to recover back onto the rock face. That is the case almost always, it is why climbers rope themselves together, as it reduces the risk to the individual. However, if the system fails, a vital piton pulls out, or a holding rope breaks, momentum builds almost instantly, and the whole group falls. The risk to the individual is lessened dramatically by the presence of the ropes, however, if the black swan flies in, the group falls.

It seems Corona is our black swan.

In Australia we have had consistent growth since late 1991, 28 and a bit years. In that time we have hollowed out manufacturing, sold off public and private assets, more often than not to international groups, embraced the ‘gig’ economy of casual and short term employment, and forgotten how to think strategically and for the benefit of the group. In its place, we have lauded individuality, immediate gratification, and the expectation of something for nothing.

It seems we are now about to pay a high price.

The rope has come loose from the rock face.

I wrote an article last weekend for an industry forum, expecting it to be published on Monday or Tuesday after the editor had a look at it and got organised. The pressure of ‘The bug’ got in the way, and it was not published, but I just had a look at the draft, just 7 days later, and it is out of date.

7 days, and some of the observations and predictions I made have been passed by events, predictions just a few days old have become utterly redundant.

That is how quickly this thing is moving, and we are struggling to curb its momentum.

Header photo courtesy Simon Murray.

An extreme case of Marketing Alchemy: Bananas!

Mar 11, 2020 | Branding, Marketing

Italian artist Maurizio Cattelan may have set a new world record. He taped a banana to a wall in an art exhibition in Florida on December 7, 2019, which was then sold for $120,000 (US) dollars.

The buyers, Billy and Beatrice Cox acknowledged the absurdity, but supported the impact the taped banana had on conversations about art. As a marketer, I am in awe of the process by which Cattelan turned a perfectly ordinary banana, into a cash cow.

Marketing alchemy at work.

A competitive artist at the exhibition ensured the banana would not go off, by eating it. An act of sabotage, or extension of the publicity the ‘thingo’ (I have difficulty calling it art, or even exhibit) generated.

Nevertheless, it is a massive demonstration of the contextual impact on the perceived value of an object.

You can buy an Eric Clapton signature Stratocaster for a couple of grand, new, or had you been at Christies in New York on June 24, 2004, you would have seen Eric’s Stratocaster (nicknamed ‘Blackie) that was the mainstay of his playing during the heydays of ‘Cream’, sold for $959,500. Better value than a banana, at least you could have resold it, rather than have some goose run up and eat it.

All this proves, once again, that utility has little to do with value.

Update: November 2024. The monkeys have really come out to play. The original buyers of this ‘art’ the Cox’s sold it subsequently for 184k, on-sold twice more for 150k and 230k. It has now been sold again at an auction in new York for 6.2 million according to a video in X. (which I always believe to be the truth..???). The absurdity of this is disturbing, Every few days the thingo has a new banana added, presumably to keep the ‘art’ fresh. I have never heard of such marketing alchemy as this! https://tinyurl.com/w7ma9fvx

5 essential factors to build a B2B sales pipeline that delivers consistent revenue.

Mar 9, 2020 | Customers, Sales

Selling B2B is a complex activity. Success takes time, effort, and persistence.

Therefore, to be truly productive, it requires the discipline of a repeatable process that is also measurable and scalable.

In order to achieve this outcome, there are 5 factors you should be building into your planning cycles.

Have a very clear view of your target customer profiles.

You cannot be all things to all people, you have to tailor the value proposition you communicate to the problems and aspirations of the target you are approaching. Many businesses have a number of key targets, keeping them clearly separate, with separate value propositions is essential.

For example, one of my clients is a printer, not a large business, but one that has a very wide range of services available internally, from original artwork, to various forms of printing, die cutting, assembly and decoration. They have two primary verticals they target .

The first is businesses involved in trade shows. Typically, those businesses leave their printing and stand design needs to the last, and that can cost a lot of money, leads to conflict and suboptimal outcomes. Given they have everything required under the one roof, the time from briefing to delivery is way shorter and usually cheaper than the business managing the various facets themselves.
The second is small and medium sized clubs, those with limited internal marketing and design resources, but a need for a lot of work done to a consistent theme. Again, keeping the work in house ensures a quality outcome at a competitive price.

Demonstrate your expertise.

There are as many ways to do this as there are stars in the sky, pick a few that are particularly relevant to your customers, and focus on them. Almost inevitably the best way is to give away information, in such a way that the receiver recognises that the information you have given is valuable, and if it is for free, how much more is there to be gained by working with you?. This might be in the form of blog posts, webinars, conference presentations, and many others, The best however, is having your current customers refer business to you, either directly, or via testimonials in one form or another. People trust other people, they will discount your own claims, simply because they recognise the self-interest.

Observe the 3 second rule.

Every sales call, conversation, post on your website, whatever the material, the most important part of it is the headline. If you cannot grab the attention of the audience with your headline, draw them into the body of the material so they can become more engaged in some way, they will be gone. You have 3 seconds of their attention, after which you have to earn every further second. This is particularly true in a sales phone call, that most dreaded of mediums. Be direct, and specific. ‘Hi, this is (your name) from (company name) we are expert at helping companies like yours with (target pain point) by (specific promise), and would like to take no more than 10 minutes to see how we might be able to assist you’. There are many variations to this, but simple, to the point, and outcome specific works, while making it as hard as possible to say ‘no’ to the next step in the process, which is often a meeting.

Remove the risk.

For a potential customer, doing business with you the first time has some risk. Irrespective of your pitch, the social proof you may have, and the relationship you might have built during the sales process, the decision to go with you rather than the alternative will be seen as having some element of risk. When you remove the risk, put them in a place where they have nothing to lose, why would they not go with you? Most businesses have some sort of after sales service, replacement, or quality guarantee in place. When a customer is dissatisfied, there is some mechanism to address the problem, so why not make it explicit, a part of your offer, remove the risk. The potential cost is already factored into your price, it is just that you hope nobody uses it because you always have satisfied customers. Remove the risk from making the choice to go with you, and your sales will zoom!

It is easier to get more from a current customer than it is to find a new one.

How often we forget this, and devote resources too hunting out new customers, when there is potentially more business for you in the current client roster, their associated companies, and perhaps those to whom your current clients are happy to offer referrals. This requires that you build relationships over time, and those relationships are based on trust, mutual benefit, and importantly, your performance over time. My favourite measure of sales effectiveness is ‘share of wallet‘. It is a demanding measure, it forces you to develop intimacy with your customers business, as well as understanding your own capabilities very well, so you can determine what is inside the wallet, and what is outside, and therefore not productive to chase.

Call me when the experience I have can help address these challenges.

Marketing technology. Master or servant?

Mar 4, 2020 | Communication, Marketing

This is a story of two modest sized SME clients.

One has spent a lot of time, effort and money building a marketing technology ‘stack’, to use the vernacular. The expectation was that it would deliver significant marketing productivity, which they defined pretty well with a range of measures.

The other uses a basic system to record customer contacts and follow ups, as well as a semi manual system to create, collect and collate information, or ‘content’, combined with social platforms and their website for lead generation.

The first client, with the sophisticated system has a tiger by the tail. The technology is ruling them, is unrelenting, unforgiving, and prone to drive them down dead ends because their data input is patchy and sometimes flawed. Their recognition is that after all the effort, they are little better off than before the technology, just lighter in the pocket, and wearing people out.

The second client is struggling with the processes, particularly the manual interventions required, and the personal level of engagement necessary. There is frustration as they are continually told, ‘all this should be automated’ , but when you look at the total cost of conversion, share of wallet, lifetime value and referrals, they are much better off.

The question then is the extent to which the software is serving the purpose to which it has been directed, vs. serving itself. The intervention of people has been removed, automated, and the automation does not give a fig about the human interactions that make relationships, it just needs to be fed data.

Greek philosopher Sophocles is quoted to have said, ‘nothing vast enters out world without a curse’ , and never has that reported quote been truer than when we consider the automatic responses we all have to the digital triggers now prevalent in our lives.

Give me back some of the humanity, with all its ambiguity and nuances any day.

So, as you are considering automation of your revenue generation processes, never forget to account for the fact that people do business with people, in strong preference to algorithms, which are just tools.

Header cartoon, Courtesy XKCD