What do you do when you suddenly lose two-thirds of your business? How do you react? Would you survive? If so, how long will you survive?
Or, would you just be like the rabbit in the headlights – staring and not knowing what to do?
That was my business back in 2012/2013. You may remember that there was a resources boom which turned into a resources bust – and we were collateral damage. We lost at least six contracts (I stopped counting) in quick succession. All of those contracts were fully resourced with people, vehicles and equipment. One phone call after the other: “Sorry, the project’s cancelled”. Terrifying stuff.
And now, that same thing is happening to thousands of Australian small businesses owners. First the bushfires, and now COVID-19.
In our instance, we did survive. We were bruised and battered but are still here to tell the tale, and I hope that some of the lessons I learned can help other Small Business owners.
We are now going into a recession – at least. The last one of those was 30 years ago and took a heavy toll on Australia. But, there were also many businesses that survived that last recession. Similarly, there are businesses that emerged from the wreckage of the mining boom and bust intact.
These are the resilient ones.
So why do some businesses thrive while others don’t?
After the resources bust, the University of Queensland conducted a study of small business resilience. The goal was to find out what were the common characteristics of the businesses that survived.
The results of the study reflect my own experience, and are equally applicable to any small business, in any area, in any industry.
The UQ 4 Critical Success Factors
According to UQ’s study, there are 4 success factors that determine whether a business dies, survives or thrives when hit by a major economic upheaval. These are:
Being able to react quickly to changes. You need to be ready to re-allocate resources, or even change the resources you use to retain market share and position. Adaptive businesses are highly focussed on customer satisfaction.
Be constantly on the lookout for opportunities and threats in the environment. Be prepared to introduce new products or services rapidly, or even change the entire organisational structure when necessary. We are seeing plenty of this now – a bakery in Melbourne that sells Bake Your Own Sourdough Kits, or a music school in Rockhampton teaching via video links. The proactive business owner is committed to both their own self-development and development of their staff.
Connectedness, to me, is a subset of pro-activeness. Cultivate and keep an active network of suppliers, advisers, customers, peers and strategic partners who will help to keep tabs on what is happening in the industry and community. In addition, these networks will give you access to other market segments or industries.
‘Slack’ is the ability to source additional resources (equipment, skilled staff, finance) to meet additional demand or to take advantage of opportunities as they present themselves. In this current crisis, having additional resources available may or may not be useful, depending on how they can be used within our limitations!
The Small Company, Big Business Success Factors
In addition to the UQ list, I have a few factors of my own that come from my own (expensive) experience.
Your Circle of Control
When faced with a crisis such as COVID-19, it is so easy to be overwhelmed. Our minds trigger the fight or flight response, and we can be incapable of making decisions – let alone sensible ones. It is vital to remain focused on our Circle of Control – the things we can actually do ourselves to improve our situation. Identify and concentrate on those actions, because this is where we need to be spending our time and emotional energy.
Every business should have a basic Risk Management plan in place. We need to contemplate & develop:
- things that could go wrong,
- what would happen if they did go wrong,
- how we can help prevent them happening, and
- what to do if the worst does happen.
It doesn’t have to be complex, and you won’t be spot-on all the time, but some preparation is infinitely better than none. Having a Risk Management Plan allowed us to go through a flood with minimal damage and disruption.
Difficult, I know. But that doesn’t mean that you don’t at least try to accumulate some cash for a rainy day. The average Australian Small Business has sufficient cash reserves for 27 days, and the consequences are clearly showing during this crisis.
The Single Client Portfolio
This is having all your eggs in one basket. If your one client disappears, so does your business. As a startup, having just one client may be a godsend, but aim to add more as you grow.
Be (reliably) informed
It’s critically important during this crisis to be reliably informed, but it’s always important. Watch the ABC or other credible news sources. Be aware of what’s happening in the economy, in markets, in the world. Facebook etc. are not reliable news sources.
For some businesses caught in the COVID19 headlights, the damage will have been too great. For so many others though, there are opportunities. Be Adaptive, be Proactive, concentrate on your Circle of Control, and start your planning for the other side.
This post was written by Flying Solo member Bronwyn Reid, founder of Small Company, Big Business