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Five ways to keep your business afloat in a crisis

Successful transformations are quick and relatively painless when you have these five enablers in place

business, brian sands

Crisis is usually an external event, such as the coronavirus pandemic, and regardless of whether it’s a supply chain insolvency or a macro-economic wrecking ball, it will not necessarily be your doing. More than likely however, it will be your problem, says Melbourne-based business strategy advisor and interim executive Brian Sands.

According to the Australian Securities and Investments Commission, there were 10,748 insolvency appointments across Australia in the FY2019. In round numbers, that’s around 900 a month and 45 per business day, a sobering statistic that represents approximately five per cent of the new companies registered the year before.

“It is hard to comprehend that in the midst of a global pandemic and economic distress that these appointments have declined 60 per cent in one year. However, if it were not for government intervention – firstly through safe harbour provisions, and now through legislation that enables small business restructure – there is no doubt that the statistics for 2020 would have been extraordinary, and the fallout significant,” says Sands.

business, brian sands
Melbourne strategy analyst Brian Sands.

Small businesses account for 97 per cent of Australian businesses by headcount and 33 per cent of GDP, according to the Australian Small Business and Family Enterprise Ombudsman.

Sands says: “Under this new debtor-managed rather creditor-enforced legislation, there are operational mechanisms and qualified practitioners that will enable distressed small businesses to restructure. Great!

“But how will these small and usually under-resourced businesses ensure that they are intervention ready, able to survive an external process led by someone else?”

A Tactical Response Mindset

In order to be truly prepared for not only what the business world throws at you, but to also ensure that you can quickly navigate any intervention, there are five softer yet high-value and easy-to-achieve enablers that will unlock your solution, rather than dwell on the mechanics of your problem, Sands explains.

  • A.C.E. people. Aligned (know what to do), capable (can do) and engaged (want to do) people will be your ultimate enablers. Building a cohort based on capability alone won’t sustain a business, as they are playing the game rather than building the stadium and quite often aren’t up for the hard yards. Be prepared to make decisions early – if you think some people may not be up for a challenge then replace them if you can’t retrain them. Don’t allow them to potentially deplete the discretionary efforts of others who will be.
  • Convergence. Concurrent strategies are designed to provide complementary business outcomes. We know what happens when all the eggs are in one basket; however, hedging your bets by believing that concurrent strategies will succeed in a mutually excluded relationship is not only adding a layer of cost and complexity, but it’s also moving the target. Since it usually indicates that you don’t know where you are going, simplify the end from the start.
  • Customer centricity. Authentic win–win relationships with your customer need to predate any crisis because when you are ‘in deep’, unless they are engaged in you, your compelling story and your business, it is unlikely they will partner with your mitigation strategy. Knocking on their door for the first time when you are in trouble will likely lead to nowhere. Customers buy solutions not problems and they definitely won’t want yours.
  • Rainy day. Even if your business performance says you don’t need debt, put some away in the bottom drawer. In the rapid-paced world in which we do business today, you don’t know what risk (or opportunity) could come out of left field. The ability to secure debt and the cost of such a lifeline when deep in crisis may be a bridge too far. Consider the annual application fee as simply an insurance policy that will pay out when you need it.
  • Subtle mentors. This is not about them, it’s about you. Surrounding yourself with great people is a no-brainer, although it is the commitment and resilience of your internal people – those who are often up to their necks in operational carnage, those A.C.E. people who not only know what’s in it for them, but also know what’s on the line for you – who will be your eyes and ears, and unlock effort from you when you think you may not have anything left in the tank.
  • “Successful transformations are quick and relatively painless when you have these five enablers in place,” Sands says. “Change will become more of an innovation rather than an intervention, and it will indicate to the world that you are in front of the game, that you are agile and that you are willing and able to optimise whatever gets thrown your way. It’s about having a first-mover mindset.”

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