“Don’t it always seem to go, that you don’t know what you’ve got ‘til it’s gone?”, sang Joni Mitchell in 1970. And those words have proved to be true again and again for many people in life and business.
When I went on leave in December, just before Christmas, I had no idea about the issues I would be dealing with in our fiery summer where we went from smoke haze, to fires, to floods to flu. My careful planning and budgeting didn’t take into account a whole lot of issues that I now know will have a direct impact on my business.
None of these things made it to my business contingency plan. Although, to be fair, I had factored in natural disasters – I just didn’t know the form.
x Government reaction to bushfires
x Government reaction to coronavirus
x Education sector subdued due to flu
x Hospitality sector subdued due to flu
x Fires/floods/flu hit marketing budgets
x Big 4 hit by audit/wage scandals
x Banks/finance sector hit by everything
x NFPs reeling under royal commissions
x Donations to charities diverted to fires
And yet these things, that come out of nowhere and for which I can have just the sketch of a plan, can have a significant impact on me and many a small business owner.
In my business, as I suspect in many, December, January and February are the quietest months of the year. Much of the work that our clients want to cover those months, is started earlier so it’s done and dusted well before their teams start taking holidays.
For those who get back to work in January, it’s often a matter of ‘what can we do to keep things ticking over until the jobs start building up again in February?’. Add to that, clients who aren’t coming back to work (bushfires), projects that have been delayed (government reaction to bushfires), clients that are in quarantine somewhere in the world (coronavirus) and projects that have been delayed (wave effect of coronavirus), then the cold start to the year pushes the freeze-out until March.
How do you ride out the big freeze?
So as a small business, how do you insulate yourself from the cold? The business gurus tell you it’s all about managing cashflow so that the money in the good times is there to help you manage in the lean. The difficulty is, you don’t know when the good times are until they’ve passed. It’s that “you don’t know what you’ve got, until it’s gone”.
Because we do manage our cashflow, we maintain liquidity in the company to cover our expected outlays during December, January and February. However, when it’s almost March and the planned and forecast work hasn’t started then I worry.
Our education clients are under considerable pressure with 20% of their students in quarantine. Our government clients are preoccupied with issues much bigger than a small business getting started on (to them) a small project. Our insurance clients are inundated and can’t handle one more thing. Our NFPs are supporting people post fires, mid-flood and mid-flu. Some of our travel and hospitality clients are busy going out of business (our travel agent closed the door last week). Consumers are careful of spending on discretionary items, so our nature, beauty and fashion clients have pared back their budgets.
Cold spreads to the community
Whatever the cause, we have given out less work and so the cold start to the year continues out into the community. Usually, by this time of the year we have about 24 people busy on projects all at the same time. That’s 24 families or households who directly have more money coming in because we’re in business. Then you add in our accountant, our bookkeeper, our web manager, our IT support team, our marketing person and our designers. You can see that we are doing our bit for around 30 families or households. If we slow down, they slow down.
We delay adding workers
While we have bread-and-butter work booked in for the first half of the calendar year, it’s the extra jobs that come in that can make the difference between breaking even and profitability. It’s the difference between just keeping our workforce on and considering ‘should we employ another person’? It’s the difference between our contractors knowing they’ve got work booked in for months, so they can afford to get a nanny two days a week and them not being able to commit. That means, another family, another household is feeling the chill.
And that’s a cold start to the year
I think that 2020 is shaping up to be the year that Australia’s SMEs catch a cold. And if that happens, there could be sniffles all round.